Is a Debt Settlement Program just a Scam?

Hi I have been working in the debt relief industry for close to a decade now and have been involved in finance for almost 20 years.  I would first like to say that this may be somewhat of a long article, my goal with this writing is for people to understand the process of reducing your debt and then to understand how to effectively choose a debt settlement company that is honest and reputable, one that offers a very effective debt settlement program. 

For starters it is important for people to understand what debt settlement is and how it works.  The main goals a consumer is trying to reach with a debt settlement program are twofold, one is to save money on how much debt they currently owe and the second is to become debt free as fast as possible.

Now one thing must be understood, debt settlement is not for everyone, and what I mean by that is the process is not the easiest to go through and people must understand that prior to enrolling into a debt settlement program. 

In order to get a settlement on any of your credit card accounts you must first realize that falling behind on the payments for these accounts is necessary. There are no creditors anywhere that are willing to negotiate a debt settlement when someone is current with their payments.  I mean if you think about it why would they? If they feel you can maintain your monthly minimums that is right where they would like you to stay.  It's called the "credit treadmill", a vicious cycle of minimum payments that will last over thirty years and cost the consumer tens of thousands in interest.  This is precisely how the creditors make so much money and this is right where they would like you to stay. 

So you must understand that during the debt settlement process you will have to fall behind on your debts for the creditors to settle with you.   Once you stop paying them they completely change their tune and are much more receptive to reducing your debt drastically.  Like I said earlier this process will not be for everyone some people cannot come to grip with the fact they must fall behind on the payments and that is unfortunate.  For these people they will stay slaves to their creditors for what may end up being decades and lose a whole lot of money throughout the process.

Now during that time when a debtor is falling behind on payments the goal will be to save up as much money as possible.  This will then enable the debtor to be in position to have a negotiation made thus making a one time payment to the creditor closing out that particular account.   This process is repeated over and over again until all the accounts have been settled and the person is then debt free.  With a good and reputable debt settlement company the client can expect to save around 50% or more of what they currently owe including paying the fee as well.

Now to bring me to why this article speaks about these companies being scams!  I will say that the majority of debt settlement companies are not scams, although there are some out there that are just that, most are not.  The problems most companies have are with not fully disclosing to the potential client how debt settlement works.  Another common problem is the company setting the clients up on a program that will more than likely not work for the client.  So how do you tell the good from the bad?

The number one problem like I  said is when a company pretty much sugar coats the process of debt settlement by telling a client all the good but not letting them know about the bad.  I have spoken with countless amounts of people who have had no idea that they had to fall into default to get a settlement.  The company they were speaking with just made it seem like they were staying current and getting the benefits of settling too.  Needless to say this caused problems once the debtor realized how things worked. 

Obviously when you fall behind the creditors will be calling to collect on the debt, this is only natural and part of the routine process of these creditors.  To be honest there is really no true rhyme or reason as to how many calls someone will receive, some clients I have had in the past received quite a few calls while others rarely ever got called at all.  Now there are measures that can be taken to help slow the call activity down, but no company can guarantee that all calls will be stopped.  So if a company tries to state that they can stop all calling activity be weary of continuing to speak with them.

One major problem I see with a lot of companies is that they will simply allow anyone onto their program without fully reviewing their situation and making sure that debt settlement is a right fit for their predicament.  These companies are the worst because all they care about is putting people on the program to earn fees, they do not truly care about whether the clients get the help they desire.   Before a company can guarantee acceptance onto their program they should have reviewed all of your credit card statements and make sure your activity is in compliance with settling your debts.  Many companies simply skip this step and sign people up without knowing whether they can do the correct job or not.  Any company that is pressuring you to sign up and hasn't even reviewed your situation is a company to stay away from.

Something must be understood here, to maximize the benefits of debt settlement is should be done as quickly as possible.  A lot of companies will put people onto debt settlement programs that simply are way to long for the client to get the kind of savings they were expecting.  It is best to have this whole debt settlement process wrapped up within two years or less.  There are special circumstances in which a client can be on a program for up to four years however the situation must be fully reviewed first to make sure the client is still going to get the benefits they are expecting.  The problem with some of these immoral debt settlement companies is they will just put someone on a program for 5 years or more, just so they can get the client a low monthly payment.  This low payment for many debtors is too hard to pass up so they take the bait, unknowingly that they are not going to achieve the type of savings they would like.  So be aware of companies that are like this and avoid them, they truly do not care if you succeed or not. 

Another very good way to see how competent a company is will be to check the BBB (Better Business Bureau).  A good and honest company will be an accredited member of the BBB and will have a good track record with little to no complaints and any complaints they do have should have been resolved to the clients liking.  Plus the company should be in business for a minimum of three years.  And if possible have the company email some proof of their achievements.  Most good debt settlement companies will keep on hand the settlement letters they are getting for their clients.  They should be getting new settlement letters on a monthly basis always request to see some of these.

Like I said earlier I have been in this business for almost ten years and currently I work for one of the better debt settlement companies in the business.  We have a great track record with the BBB and a very good relationship with many creditors.  If you would like an honest evaluation of your debt situation then click the link below and fill out an application requesting to have free consultation with me.  I will fully go over your situation and advise you to whether debt settlement would be a good fit for you.   

Debt Settlement Program