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Debt settlement companies might not overcome financial challenges

Many Florida debtors who are fearful of filing for bankruptcy to clear overwhelming debt might think about using a debt settlement company. Their advertising campaigns are saturating the market with alternatives to filing for bankruptcy and helping to settle consumer debt. It might be an intriguing possibility, but it is imperative to understand how these companies operate. Sometimes it is preferable to get legal assistance before taking a step that can make matters worse.

These companies will make offers in which they will negotiate with creditors to lower what is owed. It is vital to remember that a debt settlement company can be exorbitantly expensive. They will tell the debtor to stop paying their bills - often a step that is totally against what many debtors believe. Doing this will increase the attempts on the part of the creditor to collect what is owed along with more contact, but it will lead to late fees and penalty interest. Creditors are not obligated to work with these companies and the debts might not be settled even if the entire process is completed.

A debt settlement company will tell the person that instead of using money that is left over after daily living expenses to pay the bills, it will be put into an account that will be managed by a third party. There could be fees associated with this account. The creditor can file a lawsuit against the debtor for failure to pay. If the company does not settle some or all the debts, the accrued fees can destroy whatever assets the person has. Finally, credit scores will be significantly harmed and the debts might not be cleared.

Before doing anything in trying to get out of debt, a person who is unsure of how to proceed to get out from under financial challenges should understand all the options and tactics that have a time-tested history of working. A legal professional with experience in dealing with creditors will understand the law, the contact language that they can use, and how to put a stop to harassment while formulating a strategy to move forward. That is the first call that a debtor should make.

Source: consumerfinance.gov, "What are debt settlement/debt relief services and should I use them?," accessed on Sept. 26, 2017

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