Is the debt settlement industry trustworthy?
In answering the question, "is the debt settlement industry trustworthy", we also have to ask the questions, "is there competition?", "is the competition trustworthy?; and what does "trustworthy" mean? Is it synonymous to "of worth?"
If the issue is about debt settlement is worth and competition – according to the research paper submitted by Franklin Debt Relief's CEO, Robert Zangrili, 1) there are more resolved cases in debt settlement than in credit counseling and 2) the drop-out rate in credit counseling is higher than in debt settlement. Which is not to say that credit counseling never worked, or does not work. It in fact does, but for debt amounts that are relatively low ($10,000 and below) and for accounts that are still current. Debt settlement just works better with accounts that have high balances ($10,000 and above) accounts that are already delinquent.
The new state legislation that was passed in the state of Illinois bans advanced fees and caps settlement fees at 15% — which the debt settlement industry objected to as it would put them away for good, slowly. The industry standard fee is 15% of the total debt amount or 20-25% of the settlement amount. Which the state department sees as too much. But according to a debt settlement lobbyist, "HB 4781 (or the Illinois Debt Settlement Consumer Protection Act) allows credit counseling companies to collect fees that are up to six times higher than the fees allowed by debt settlement companies). So if the lawmakers are against the modest debt settlement fees, it's a bit puzzling why the case is not the same with credit counseling agencies.
As for the consumers, they are concerned about paying fees for nothing as the banks might refuse to settle, which they most likely will (if the account is still current and the consumer can't afford to give 75% of the balance in one lump sum) and either sue the client for judgment (wherein they'd get the full amount back somehow) or pass the account on to a third party collection agency (which they probably own and get a portion of the debt) , both of which are more favorable to them than debt settlement (which is more favorable to the consumer).
Law makers think that the per-debt-settled basis, for fees, make more sense than money-down or advanced fees before any service is done. The state department has received numerous reports about consumers filing bankruptcy after not being able to achieve anything with the debt settlement company. There are some who say that the industry would survive with the per-debt-settled basis, however, some companies have already folded because of its enforcement.
So where can the legitimate debt settlement be found?
Debt Free Destiny can consumers get matched up to the right company for free, just go to the site and fill out a form.
What are the guidelines in choosing a worthy debt settlement company?
-The settlement company's program must have a fast completion time. 12-36 months.
-The program must be able to protect and improve the consumer's credit standing.
-Must also have a good standing with the Chamber of Commerce
-A Member of TASC – The Association Of Settlement Companies and the IAPDA or the
International Association of Professional Debt Arbitrators
Questions and Answers
Jenny was in trouble with her credit card debt, and she resolved to get on the right track and avoid bankruptcy. She had heard about a debt settlement service and it sounded like a good idea: the company claimed it would negotiate with her creditors and arrange for Jenny to...
Before choosing an alternative to pay off your debt, you must fully understand each option that’s available to you. For this article, I’ve picked to focus on one of these financial choices: credit counseling. We’ll learn what it’s all about and what consequences it entails, both positive and negative. In today’s competitive world knowledge is power, so read on to learn more about credit counseling and if it’s the right choice for you.
The credit counseling process basically, is an educational program, that aims at creating awareness about credit related services in consumers, who borrow loans and use credit cards. This session is a part of debt management programs. In many cases, credit counseling is also made a compulsory activity when people are filing for bankruptcy, or undergoing foreclosure or are planning on a short sale.
It will only take a few minutes to find out if you qualify and they can tell you (without a cost to you) if bankruptcy is a better option for you. Contact a counselor today to ask them what your options are. You may be able to learn all about your own unique situation.
Credit counseling debt consolidation is offered by various companies for people facing overwhelming debt. Even if you declare personal bankruptcy in this situation, it stays in your credit record for ten years, making him eligible for future loans.
Is "debt settlement" right for you? Maybe, maybe not. This short story may shine a light to the path at the end of the tunnel for you! Let's take a closer look to discover if debt settlement is the best option for you...
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