Is Debt Settlement A Good Idea
I was recently on a financial forum and a reader asked “is debt settlement a good idea?” Of course he received all of the classic responses one would usually get asking a question like that on the Internet.
There was the debt settlement sales affiliate, predictably praising all the virtues that debt settlement has to offer.
The former consumer credit counseling employee attacking the debt settlement affiliate for scamming people out of their money and advising the client to never look into debt settlement.
The “consumer,” sounding suspiciously like the same debt settlement sales person, telling the former credit counselor how much money he had saved with xyz debt settlement company, and linking to their website as a supposed public service.
Then we have the random guy named something like baller1077 adding that the banks are in a conspiracy and getting rid of your debt is easy. To back up his claim he added that his wife’s friend just wrote paid in full on a 10 dollar check and when the bank cashed it they were required to zero out her debt. I wonder if he will come back into the forum in about 18 months and let us all know how much his wife’s friend is getting garnished on her paycheck?
Of course, there was much more back and forth and if you have ever asked a financial question in an Internet forum then the above scene is likely very familiar. As well intentioned as many responses in the forum were, nobody knew anything about the readers financial situation, yet everyone had an opinion on whether or not debt settlement was a good idea for him.
So, Is Debt Settlement a Good Idea or Not?
Obviously the answer depends solely on a consumers specific financial situation, but the truth is that in some cases a debt settlement approach is the least expensive and fastest way out of debt for consumers. Unfortunately debt settlement has gotten a bad rap because of all the unscrupulous individuals that entered the space and began to heavily market a service to many people that didn’t qualify for it.
They would charge heavy fees upfront and predictably many of their unqualified clients would drop out of the program when they realized it was not working as planned. This generated large numbers of complaints and regulators have finally stepped in to pass restrictive laws to prevent debt settlement companies from charging fees upfront. This has driven many of the scammers out of the debt settlement space, but there are still quite a few remaining and hoping to further take advantage of consumers.
The best rule of thumb if you think debt settlement is a good idea for your situation, is to never hire a company that tries to charge large upfront fees before they actually settle your debts. While this rule will not weed out all shady operators, it will help you screen a large number of them.
Under What Circumstances is Debt Settlement a Good Idea?
Like Credit Counseling, Bankruptcy and any other debt solution, there are specific circumstances when a debt settlement can make great sense for a consumer.
1. A consumer has fallen behind on their bills or is no longer able to make the payments.
2. A Credit Counseling program will not provide the consumer with a low enough monthly payment to meet their current cash flow situation.
3. A consumer is unable or does not want to file for chapter 7 bankruptcy.
4. A consumer has an expectation that they will be able to raise the money needed for settlement in a reasonable time frame.
Every situation is different and this is by no means an exhaustive list because there are so many individual factors that a consumer must consider when deciding on their best debt relief option. A consumer struggling with debt should always fully explore all debt relief options available to them, but debt settlement is a good idea to explore if you find yourself in between Credit Counseling and Bankruptcy with neither providing you a great solution.
So is debt settlement a good idea? Yes, but only when it makes the most sense.
At New Era Debt Solutions, our Counselors are not paid on commission and we don’t make a dime until we successfully settle your debt. If you would like to learn what a debt settlement strategy would look like in your situation, you can request a free consultation with a knowledgeable debt counselor today.
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