SAN DIEGO, July 8, 2013 /PRNewswire-iReach/ -- Paul Paquin with Golden Financial Services stated "the bad reputation debt settlement services sometimes have, originates with sales agents that mislead consumers into joining the programs, without being transparent about the services and clearly explaining how everything works. At Golden Financial Services we believe in being transparent with our clients, and ensuring they understand every step of the program before joining."
Today we will take a closer look at:
- Are debt settlement services needed?
- All debt relief options available including staying current, doing nothing at all, consolidation loans and debt relief programs.
- Some of the false misconceptions and accusations produced against debt settlement companies, which lead to the service being negatively stereotyped.
- The truth about the positive and negative effects that debt settlement services can have on a person's financial health.
Are debt settlement services needed?
Lets's rephrase the question.
Should people be forced to file for bankruptcy and basically dump their financial well-being down the drain?
The answer is, "no, they should not be forced to file for bankruptcy and that is why debt settlement programs are needed."
Let's now take a look at the 5 options that are available to deal with unsecured debt.
- Staying Current - Sometimes by paying only minimum payments to creditors it could lead to a person paying on their debt for more than ten years, before getting close to paying off their balances. By using a debt calculator like the one that BankRate provides, a consumer can learn how to pay off debt on their own, or at least find out if that is even a realistic choice. Here is the BankRate debt calculator that people can try out for free.
- Debt Settlement Services – A consumer gets set up with one monthly payment. A person could end up paying back a significant amount less than owed. This type of plan typically gets a person out of debt in about 3 years or less. This option can lower a person's credit score, have potential tax consequences, lead to creditor phone calls and possible lawsuits. Accounts must get turned over to a collection agency before the settlement company settles with creditors, but in the end this can often be the fastest way to get out of debt while saving people the most money. Here is a debt relief program calculator tool for consumers to try.
- Consumer Credit Counseling - This option sets a consumer up with one consolidated monthly payment, most of the time with a reduced interest rate. The credit reporting agencies show that a person is having their accounts managed by a credit counseling agency when consumers enroll on this type of program.
- Do nothing and eventually get sued – Steve Bucci at Bankrate.com says it best, "It is never a good idea to ignore your creditors. Picture a train moving down a track. The farther the train travels, the faster it goes. Well, your debts are also traveling down a track toward debt collection. It moves from a company's in-house collections department to a collection agency to a lawyer and then to a judge. When it finally comes back to you, it's going 100 miles an hour as it hits your paycheck with a garnishment order."
- Bankruptcy - Learn more about bankruptcy here. Bankruptcy leads to having the worst effects on a person's credit report when compared to other debt relief options.
Let's now dig in and look at some of the false assumptions made about debt settlement companies.
"Debt settlement services have hidden fees and charges."
If a company is compliant with the BBB and FTC they will have a full disclosure client agreement that clearly illustrates a person's payments and ALL FEES.
- Pay their negotiators at the time settlements are completed. This ensures that settlement fees are not collected unless settlements actually occur.
- Have experienced financial specialists that spend hours with their potential clients ensuring they are fully aware of every detail on the program.
- Have senior advisors that provide potential clients with a secondary compliance call ensuring that all payment and program information has been disclosed and that consumers fully understand every detail of the program before getting approved on the plan.
"Debt settlement services lead to consumers getting sued and ending up in worse financial shape in the end."
Doing your diligence prior to joining with any company and ensuring they are either non-profit, highly rated with the BBB, or have more than 5 years in business, will help a person with staying away from scam companies that will take their money, and leave them in worse financial shape.
Understanding how a debt settlement program works is the key for a consumer if they are looking to have a successful program.
A Reputable company:
- Sets their clients expectations at the right level where there are no surprises.
- Gives their clients an attorney in their state that provides them with legal protection and lawsuit defense in case creditors sue. This allows consumers to finish the program successfully even if their creditors do sue.
"Debt settlement will ruin your credit for life"
Debt settlement services can lower a person's credit score, since creditors are not paid on a monthly basis.
Debt settlement services are intended to help people with paying off unmanageable unsecured debt, and not increase their credit score.
The good news is that upon graduation on a debt settlement program a person can rebuild their credit score. A good company teaches their clients how to rebuild their credit score.
Rebuilding Credit After Graduation on a Debt Settlement Service
Media Contact: Paul Paquin, Golden Financial Services, 866-376-9846, firstname.lastname@example.org
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SOURCE Golden Financial Services