Debt settlement companies claim that they offer a viable alternative to bankruptcy. But what they don't tell their customers is that debt settlement fails more often than it succeeds.
Below are three secrets about debt settlement that the debt settlement industry does not want you to know about:
- The fees are steep and they often reduce the amount of money that will go to pay off your debt. Debt settlement companies make their money off of the fees they charge and those fees aren't cheap. Many debt settlement customers have found themselves paying more in fees to the debt settlement company that was paid to the creditor.
- Debt settlement companies may not have the power to settle all of your debts. A matter of fact, the debt settlement company can't force any creditor to come to the negotiating table, let alone settle your debts for pennies on the dollar like the ads claim. Companies such as American Express officially will not negotiate with debt settlement companies and the number of creditors who refuse to negotiate with debt settlement companies is growing.
- When you stop paying your bills, the lawsuits will come sooner not later. Debt settlement companies are notorious for telling their clients to stop paying their bills; but what they don't tell their clients is that they can and will be sued for nonpayment even if they are in the process of settling the debt. Many debtors who are currently current on their bill payments are sucked into debt settlement schemes, stop paying their debts and end up with default judgment because of it. Remember, filing bankruptcy is the only way you can not pay your debts and avoid a lawsuit because of it.