If you have not read it yet, I think you’ll enjoy “The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.”

Thanks for sharing the good advice.

Steve

When evaluating any debt relief company online if they do not have a FULL disclaimer exlpaining their marketing claims. LEAVE.

Reduction expectations:
Do not trust any company that advertises debt reductions over 50%. Amazing some advertise 40-80% reductions! Which is advertising the exception not the rule.

The Debt Settlement industry averages a 50% reduction. PLUS the cost of the service, normally 10-15% of your total debt. A better expectation is that at the end of a program your debts might be reduced by a total of 30-40% of the entire debt load including service fees. Meaning you may pay 60 cents for every dollar you owe.

Hardship – This is a hardship based program you MUST demonstrate a legitmate hardship or absolutely no negotiation will take place. If a company does not review and scrutinize your hardship, run.

Negotiation is NOT a 100% done deal.
You must be willing to risk that your debts do NOT get settled, and or they are reduced only slightly.

Length of Program.
Creditors will NOT wait forever to negotiate with you. Going for a low monthly payment extends the length of your program and does not help you it can hurt you. Programs over 36 months are risky.

About Credit Counseling/Debt Mangagement. Although they are not directly owned by credit card companies they are highly compensated by them. If you complete their program they no longer get paid.. so their incentives to get you debt free are questionable. Also, many counseling services have board members with direct ties to credit card companies. Less than 20% of consumers complete a credit counseling program successfully. If you miss a payment to your counseling program, you can be dropped and you are a back at step one, with the same debt and problem…two years of effort later. In my view there is no real comparison between settlement and credit counseling as they serve two different purposes.

Settlement is a strong and serious reaction to debts you are *not able* to pay and you face a potential bankruptcy.

Counseling is for consumers who simply got over their head with high interest rate credit cards and need “breathing room” but they are *able* to make their monthly minimum payments.

As always, check with the BBB, your state Attorney General’s website and ask your service provider to give proof that they are licensed to offer their service in your state.
.-= Jerry Nordstrom´s last blog ..8 ways to find your way to the WC =-.