Debt Settlement Companies Too Good To Be True

During this difficult economy, many people have experienced financial problems and do not know where to turn. In California, unemployment remains high and the housing market has collapsed. Homeowners are unable to repay their mortgages, and other expenses can leave many people buried under debt with seemingly no way to get out. When someone offers the help that is so desperately needed, it is often accepted without much hesitation.

Many people are familiar with debt settlement companies. They frequently solicit customers through the Internet, mail or television with promises of reversing financial problems. Unfortunately, most find themselves in even worse financial trouble after using a debt settlement service.

Promises They Can't And Won't Keep

Debt settlement companies state that they will work with your creditors by negotiating to reduce the amount of debt that you currently have. Often, it is required that you pay for their services upfront, and these fees can run in the hundreds or thousands of dollars. They advise you to stop making your payments, instead making monthly payments to the company to distribute to creditors.

While this may seem like the perfect solution, many clients often discover that nothing is happening to their debt. Debt settlement companies end up keeping the money for themselves, and not doing any negotiating or repaying any of your debts. Collection actions and calls by creditors increase, and the debt settlement company disappears.

What You Can Do To Protect Yourself

Never work with a company that tells you to stop paying your debts. Only the creditors can reduce your debt, and stopping payments prior to negotiating may jeopardize your chances at getting these amounts reduced. If a company is demanding an upfront fee for its services, consider all your options before agreeing to work with it.

If you are having financial trouble, your best option may be scheduling an appointment with a bankruptcy attorney in your area. Many offer a free consultation, which will allow you to find solutions that work best for your situation. You will be able to discuss all of the available options, including alternatives to bankruptcy, and make a decision that will help you control your debt.