Credit rating was very good for a time and my friend received numerous offers for credit cards (at low introductory rates), which he accepted and now he is over extended. I do not know the exact amount he owes, but he has been contacted by Safeguard Financial to reduce his monthly payments and debt through their plan. I think it sounds too good to be true and is a scam of some sort. He owns his own home, but has a home improvement loan against it.
Have you heard of Safeguard Financial and does this sound like a legitimate program? Are there any legitimate debt settlement progams that he could be referred to? Is there anywhere he can get information about how the debt settlement program would work, assuming he can find a legitimate one? Thank you.
I had not visited the site for Safeguard Financial before and I think SafeguardFinancial.org this is the site you are talking about.
I do have significant reservations about going with a company that was doing outbound marketing with mailers or direct telephone calls. Typically those companies are more interested in the sale than anything else. They want to recoup their marketing costs.
In looking at the Safeguard page I was struck by some of the information and it concerned me since I found it to be misleading.
Their site claims that debt settlement costs less but it is not the least expensive debt relief option, bankruptcy is. At about $1,500 bankruptcy is the least expensive solution to help eliminate your debt in full.
They claim that a credit counseling program can take up to nine years. That’s just not accurate. Most credit counseling debt management programs take about five years. The advantage of the credit counseling approach is if you can afford the minimum payments the credit counseling group can reduce the interest paid to reduce the debt faster. Credit counseling has the least credit report impact of any debt relief option since the debt is being repaid in full.
They make the statement that “bankruptcy can stain your credit for up to ten years, pulling you into the “high risk” credit category.” While it is true that bankruptcy will be reported on your credit report for up to ten years in the case of a Chapter 7 bankruptcy, they fail to mention that a Chapter 13 bankruptcy will only be reported for seven years or that credit can be easily rebuilt following bankruptcy. I even publish a free guide to show people how to do that, here. If your friend followed that process then within a couple of years his credit would be well mended.
But in the context of credit report fear, the site does not mention that debt settlement will result in negative marks on the credit report that will remain for seven years. The delinquent debts and settled payments are not positive statements and debt settlement can even result in lawsuits, judgments, and wage garnishments. None of that is explained.
The Safeguard Financial site also says debt settlement takes less time in a heading and then mentions that bankruptcy can take less time. But it can take significantly less time. Debt settlement typically take years and a Chapter 7 bankruptcy takes about three months. And their statements that a debt consolidation plan takes 30 years is incorrect as well. Debt consolidation programs like LendingClub.com have three to five year unsecured debt consolidation loans at better than bank rates.
I really can’t agree with the statement that debt settlement is less stressful either. In debt settlement collections will ensue, there is a good chance your friend may face being sued, a judgment and a wage garnishment. Forgiven debt may be taxable as income and the negative marks on the credit report can be problematic. All of that sounds pretty stressful to me and many consumers that embark on that route.
The page also mentions, “If you are in a situation where creditors are harassing you, documents can be sent to creditors to help eliminate the harassing phone calls and intimidating letters.” Again, a half-truth. Third-party collection agencies can be sent a cease & desist letter but that is just an invitation for your friend to be sued. Once you cut off that communication the collector can refer your case for legal action or back to the original creditor. The original creditor is not under any requirement to cease & desist communications upon the receipt of such a letter.
If your friend is drowning in debt the best course of action would be to read The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. Then follow that up by contacting a credit counseling company and a bankruptcy attorney to hear how those solutions would apply to your friend’s situation. If you want you can click here for credit counseling information. You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact