Debt Settlement - Beware Of Scams

When choosing a debt settlement company make sure you do your homework before joining one. Many companies promise you the world, not true. In the debt settlement world nothing is as easy or as predictable as most companies make it seem to be. Do not fall for the trap of promises, starting with you are not going to get sued. Fact is, creditors have the right to legally claim the money owed to them by their debtors. Joining a debt settlement program can only worsen the situation.

Debt settlement programs are structured for you to save about two percent of your monthly income for settlement purposes. If you could save that much, you would be better off making payments to your creditors. This strategy will only get you deeper into debt, because you will not be making any payments to your creditors while late fees and interest rates are still accumulating.

Some debt companies companies can only help the situation become more agonizing. Lets start with the fact that you are already in debt. What is the first thing a debt settlement company will ask for? Money. Yes, money in the form of a retainer fee. Retainer fees can range anywhere from 3 to 10% of your actual debt. Meaning if you have a debt of $30,000.00 you could be paying out anywhere between $900.00 to $3,000.00 to join a debt settlement program. Now, what kind of help is that? If you had this much money on hand you would be paying your creditors.

More promises and more lies. Debt settlement companies promise ridiculous amounts of savings, not true. Beware of this tactic, most savings for credit card debt falls anywhere between 30 to 40%. Meaning you will have to pay between 60 to 70 cents on the dollar when you are all said and done. This will include all late fees and interest charges accumulated while not making payments to your creditors. Let us not mention the fact you may end up in legal trouble before you settle all of your debt.

Everything I have written before is just the tip of the iceberg. Costly retainer fees, late charges, interest charges, etc.. What about the commission rates? Most companies charge commission based on your savings and expect to receive this payment lump sum. Many companies charge anywhere from 20 to %35 commissions, if you had this money handy you would not be in debt or at least you would be making your payments on time. For example: on a debt of $10,000.00( at time of settlement) if you saved 50%, commission at the 20% rate would be $1,000.00 plus the $5,000.00 going out to your creditor. That means you would have to come up with $6,000.00 dollars to settle the account. If you had this amount of money lying around you would be making your monthly payments.

Now you see where we are getting here? If you are really in need of true help, please start with a company that has very low set-up fees or none at all. Start with a company that will not make any bogus claims or promises, you can always get sued or settle for at lot less than most companies promise. Start with a company with low commission rates. Always keep your financial situation on mind, debt settlement may not be the right alternative for you if you join the wrong company.

The good news is there are very many honest companies out there that have your best interest at hand. Do your homework before you decide on which company you will settle on.

Eric Gartle has worked in the debt settlement industry for the last 10 years and has vast experience negotiating personal credit card debt as well as business debt. He has headed some of the most prestigious debt settlement companies in America. For more information regarding debt settlement please visit http://www.pemperandgartle.com

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