A
debt settlement company claims it will, for a fee, persuade your creditors to
take as little as half of what you owe to resolve your debt. Sounds good! Since
you probably don't have a bunch of cash lying around, you'll pay the debt
settlement company monthly payments. First, know that typically your payments
go 100% toward the settlement company's fee until the fee is paid. Only after
the fee is paid do you start building a settlement fund. When you've built up
enough in your debt settlement account, the company will try to settle one of
your debts.
Your
creditors have agreed to nothing. During the many months, you are making
payments to the debt settlement company, the creditors you've been told will
settle are starting or continuing aggressive collection activity. You get phone
calls and letters and worse, and you could be sued and face garnishment while
the debt settlement company is holding your money. Telling creditors that
you've signed up for a plan with Debt Settlement Arrangement. And are making monthly payments will carry no sway
whatsoever with your creditors.
They won't care. To avoid garnishment, you could be forced into bankruptcy. You can get back from the registered insolvency practitioners company the money in your account, but the fee you've paid is probably gone forever, even if the company didn't settle a single debt. Finally, nothing above is legal advice. Consult an attorney to assure a legally binding, watertight settlement agreement with a creditor.
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