Bankruptcy Alternatives: Debt Settlement
If you aren’t sure whether bankruptcy is the right choice for you, you have other options to explore. Read on for information on the debt settlement option.
You can also speak with a sponsoring bankruptcy lawyer to get a better idea about your options by simply filling out the below form.
What is Debt Settlement?
Debt settlement can be an effective alternative to bankruptcy, but
before you commit to paying a debt settlement firm, make sure you know
what you’re in for.
Some debt settlement agencies are unscrupulous and
could actually land you in more debt.
Debt settlement involves you, your creditors and a debt settlement firm.
You pay the firm for its services, which include negotiating with your creditors to reduce the total amount of money you owe.
The money you pay the company is worthwhile if you end up saving money in payments to your creditors.
Warning Signs for Dishonest Debt Settlement Companies
Remember that you’re making a financial commitment to the firm you choose to work with and you don’t have to work with the first company you find.
Take time to visit the agency’s storefront, assess the situation and consider more than one company.
Beware of a debt settler if they do any of the following:
They demand hefty fees upfront
Remember, you’re using this service to get out of debt, not to get further into it.
If a company demands complete payment right away, refuses to begin negotiating until you’ve paid in full or otherwise makes you uncomfortable with its payment demands, leave.
Consult with a trusted resource before committing your hard-earned cash to anything.
They tell you to stop making payments
Any company that encourages you to stop paying your bills is likely scamming you.
Allowing accounts to go into default can damage your credit score and lead to wage garnishment, repossession and even foreclosure.
They’re too pushy about signing a contract
If a representative seems overly eager to get you to sign a document, or tries to “explain the details” of a contract to you so you don’t have to read the whole thing, beware.
As a general rule, you should NEVER sign anything without reading it. You could end up signing something legally binding that requires you to pay the company far more than its services are worth and perhaps more than you can afford.
They pressure you to sign on or sign up
Like contract pushing, sign-up pressure usually isn’t a good sign.
Think about it: would someone trying to relieve your distress put undue pressure on you to spend money on a service? Probably not.
If you feel overwhelmed, simply walk away and give yourself time to clear your mind.
They discourage you from contacting your creditors
Debt settlement firms that tell you to avoid talking directly with your creditors should be avoided.
Direct creditor negotiation often helps struggling debtors and companies that discourage their clients from doing so may have less than honorable intentions.
They hurry you through your meeting
If you feel like the representative you’re working with is forcing you through a standard, cookie-cutter interview rather than taking the time to listen to your specific needs and concerns, move on.
Reputable agencies will work with the specifics of your case to work out a solution for your situation.
Freeing Yourself from Debt
Remember: the goal of debt settlement is to eliminate your financial obligations, not to make life easier for a customer representative.
Walking out on a friendly rep may be difficult in the short term, but if the company is offering legitimately helpful services, he or she will understand and appreciate your desire to do your homework and make an educated decision.
Be sure to also ask for any pamphlets a company has, take notes and get a second opinion before signing your name to any important documents.
For more information, check out some of Bankruptcy Central’s other bankruptcy alternatives pages:
The above summary is by no means all-inclusive and is not legal advice. For the latest information on debt settlement, please contact a bankruptcy lawyer in your area.