Smack Debt Consolidation Services

Are you contemplating on using a debt settlement or a debt consolidation service to help you get out of debt quickly? Debt experts recommend doing your homework before you select a debt settlement company. There are plenty of debt settlement scams and rip-off companies ready to make a quick buck.

Most people don't even realize the difference between debt settlement and debt consolidation.

A debt settlement company will charge you hundreds of dollars in initial account setup fees. In-fact, the first payment you make to the debt settlement company will be pocketed as fees. Even if you make regular payments to the debt settlement company, they will not pay your creditors one thin dime. Instead, the debt settlement company will open a trust account for you and will negotiate with your creditors in reducing debt. The debt settlement company will begin to negotiate with your creditors only when you have enough balance to pay off your debt accounts in full in the trust account.

In some extreme cases when you owe several thousand dollars to creditors, they may sue you. If your creditors convince the judge, he may allow your creditors to garnish your wages.

Debt settlement companies will never ask your creditors to reduce interest or stop late fees. While negotiations are on-going between the debt settlement company and your creditor, your payments will continue to shoot up since you are not paying late fees and interest on your debts.

There are plenty of shoddy debt settlement companies who won't tell you upfront. In simple words it is called as "getting permission by omission." Smart consumers will ask intelligent questions and figure out the debt settlement scams.

Rather than fall into the debt settlement company trap, you can negotiate with your creditors yourself. Some will agree to reduce interest rates and work on reducing payments. By working directly with the creditor, you will know first hand whether or not they are posting any negative information to your credit report. You will also avoid paying thousands of dollars in fees to the debt settlement company.

A few legitimate debt settlement companies will allow you to cancel your account and get a refund of what you have paid. If you feel you have been misled, don't hesitate to ask for a refund. You can always file a complaint with the Better Business Bureau or hire a debt settlement attorney to help you out.

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