I am working with someone that is working on getting out of debt. Their credit card debt had accumulated and they are looking to pay them off and look for a home. Of course with the credit card companies raising the interest rates and lowering credit limits, which in turn raises the monthly payments, it's hard to pay these debts off.
These people decided to check into the debt settlement companies and see if they could maybe help as they claim. They signed up with one and thought they were on their way to rid themselves of the never ending high payments.
Little did they know that they were getting into bigger problems.
The debt settlement service informed them that they should stop ALL payments to the credit card lenders. In place of making the payments to the credit card companies, they would automatically take out $xxx per month to place into an account. After accumulating a certain balance in the account, it will allow the debt settlement company to "negotiate" a settlement for much lower than the current owed balance.
Of course, no payments brought on daily phone calls from the credit card companies. They called the home phone, the cell phones, any sort of contact they had. It was absolutely annoying.
At first, they did speak to the credit card companies explaining their hardship, figuring the daily calls would stop. They did not. The calls were so annoying, these people decided to work out something with the credit card companies. To their surprise, the companies were willing to work out a plan with a lower interest rate and lower payments, which in turn would pay off their balances within 3 years.
Long story short, they signed up with each credit card for the plan and were approved for the hardship plan. Upon acceptance, they contacted the debt settlement company and informed them (via verbally and in writing) that they no longer needed their services and to stop the automatic withdrawals. They tried to talk them into continuing with different explanations. These people said they were happy with the plan that was worked out with the credit card companies.
A month went by and they noticed that their bank balances were short by $xxx. Their budget is tight and cannot afford to lose hundreds of extra dollars, which can be used to pay other bills. Anyway, checking into it, they found out the debt settlement was still taking the payments out of their account. After speaking to them again, they said they cannot return that payment because it takes time to file the paperwork to stop the process. They let it go for now.
The next month, their balance showed up short again by $xxx. Back on the phone. This time the calls were not returned and the e-mails unanswered.
These people are still battling with them, losing money and valuable time.
So, is it worth going through a debt settlement company? After reading this story, you decide.
Brigita McKelvie, REALTOR
Pennsylvania License #RS297130
Residential, Rural and Horse Properties and Farms
Cindy Stys Equestrian & Country Properties, Ltd.