When you are finding it impossible making the credit card monthly payments, high-decibel advertisements promising to slash your debts sound very enticing. However, before rushing off to sign up with a debt settlement agency, you should stop and figure out whether getting out of debt can be that easy and what the consequences are. It is very important that you decipher the myths and get to the real truth. Some examples:
Just About Anyone Can Get Their Credit Card Dues Slashed by Half
Legitimate agencies will invariably ask clientsthe reasons for their hardship to assess if the story can be convincingly presented to the card companies. Telling any cock and bull story to a credit card issuer will not work because you will have to show them proof of your hardship such as loss of employment or pay cut, an unexpected medical emergency, a divorce, etc.
Credit Card Debt Can Be Settled Only by Paying Someone to Act on Your Behalf
If your reasons are genuine and you can present the facts of your hardship convincingly, you should be able to get relief personally. However, you do need to keep in mind that the folks at the card companies have heard virtually every sob story there is. Going through a reputed agency can give you an edge because they know exactly how the card issuers think and behave. Professionals can apply many tactics for creating more pressure on the card companies to make them more amenable to settling.
You Need to Pay the Debt Settlement Company Upfront and the Company Controls the Payments
With the clampdown on many scam companies that used to collect money from customers and disappear, the law now bans fee collection in advance of debt reduction. Any money that the customer pays to the company needs to be kept in a financial institution that’s insured and has no connection with the company. The customer continues to be the owner of the money and can disengage from the agency without penalty at any time and receive back all unearned fees. Read up on debt settlement reviews to know more.
The Credit Score Remains Unaffected by Debt Settlement
The truth is that the strategy of delaying or stopping payments to the card company on which the success of the settlement negotiation usually rests impacts your credit score negatively as the non-payment gets reported. Also, when the settlement is reported, your score can take a big blow.
If Settlement Does Not Succeed, Bankruptcy Is the Only Way Out
The fact is that even if the card companies refuse to settle, you can request them for forbearance that allows you to stop making payments or make smaller payments so that you can get your finances in order. A counseling agency can assist you to evaluate all possible options for budget management.
You should take the help of a nonprofit credit counseling organization. They can help you manage your finances more responsibly and assist you in getting out of the debt trap gradually.