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How Do I Spot a Legit Debt Settlement Company?

“Dear Damon,

Hello,

I’m new to your sight and appreciate your time and effort in helping people like me! I am wondering if debt consolidation is right for me and my husband. Here is some background of our story:

I have a personal debt of about $30,000, most which is sometimes used to pay bills (yes sometimes I use credit cards to pay bills if we don’t have enough money in the bank). I have 7 credit cards (I signed up for two new ones this year in an effort to take advantage of their 0% APR). For cards with an APR, they range from 9.99% to 20.24%. For some of my credit cards, I pay more than $100 a month for interest. I have called many times to ask them to lower my rate, but no luck.

I make (gross income) about $42k a year. My husband makes about 30-40k a year. Both my in-laws moved in with us as they are elderly and unable to care for themselves. My father-in-law is retired. He does get money from the government, but that is mostly for his personal spending. My mother-in-law is semi-retired; she works part time. We pay for most of their living expenses.

We are behind on at least one bill every month and get calls weekly for late payments (which we eventually pay, but sometimes not until the next month, or as mentioned above I use a credit card). In addition to my personal debt, there is at least another $14k for car loans. Our mortgage is $2k/month. All in all, we have at least $3,000 in bills every month. I am also paying for my own parent’s mortgage of $300 every month.

I am seeking a debt settlement and have been approached by several companies (some which do not appear legit) that offer their services in reducing my debt. I have been considering this for a while but did not know if my case would be fitting, and if there were any trustworthy organizations who can help me.

I would truly appreciate any insight and guidance you may be able to offer

Help Me!”

Hello,

As to whether or not a settlement program is your best approach, I cannot tell based on the information you have provided. I would say that most debt settlement companies do not offer a service that should be considered by consumers.

Although the new law banning upfront fees has done a lot of good, there are still a lot of programs out there trying to figure out how to continue collecting money, and not enough of them actually focusing on doing a good job for their clients.

Can you tell me if you have any assets or cash reserves? How much is your monthly deficit when you pay all of your bills? Why do you think that a debt settlement approach is your best strategy?

If you would like to schedule a private phone consultation with me, I can learn a lot more about your overall situation in detail and tell you what the best strategy would be given your financial circumstances and goals.

If it turns out that you should attempt to settle with your creditors, I can point you in the direction of some good debt settlement companies and even get you a rather large discount off their fees if I make a personal referral.

Damon is a talented independent debt coach that provides in-depth assistance and consultations for people struggling with debt. If you want a personal debt coach to help you through a difficult situation or want assistance to find secret discounts offered by debt settlement companies I think Damon Day is an excellent person to contact for advice and assistance. He can be reached directly at DamonDay.com

If you have a debt related question you’d like to ask, just use the online form.

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About Damon Day

Damon Day
Damon Day is a talented Debt Coach who offers fee based consultations to consumers as an alternative to the typical free debt relief consultations which are nothing more than thinly veiled sales pitches lacking any real information to help a consumer make a good decision. You can learn more about how he can protect you from getting ripped off at DamonDay.com
  • KPP

    Depending on your mortgage interest rate, you may want to consider a loan modification, which will drop your monthly payments $300 to $600. Loan mods are done for free by HUD approved agencies:

    http://www.hud.gov/offices/hsg

    These same agencies can do a counseling session to review your income and expenses, and explain the options you have. One may be a hardship debt management program, where the creditors offer zero or very low interest rates, repayment rates as low as 1.75% of the balance, stop late and over limit fees, etc.

    Alternately, I know some people have had no problem getting reduced interest rates or even a six month payment holiday when they tell the creditor that one of the earners in the household has lost their job. They don’t verify such information.

  • Anonymous

    Depending on your mortgage interest rate, you may want to consider a loan modification, which will drop your monthly payments $300 to $600. Loan mods are done for free by HUD approved agencies:

    http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

    These same agencies can do a counseling session to review your income and expenses, and explain the options you have. One may be a hardship debt management program, where the creditors offer zero or very low interest rates, repayment rates as low as 1.75% of the balance, stop late and over limit fees, etc.

    Alternately, I know some people have had no problem getting reduced interest rates or even a six month payment holiday when they tell the creditor that one of the earners in the household has lost their job. They don’t verify such information.

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