it is a word that can be convenient and taxing at the same time. Most of us has experienced being in debt one way or the other. Debts can vary from a few bucks to hundreds that can make you feel trapped in a hole.
In response to this common problem, debt management companies have emerged. They offer a wide array of services that range from debt relief to debt management. All of these companies would lead you to believe that they can solve your problem.
It starts with a call. A representative on the other end will guarantee to put an end to all your debt problems, as long as you cooperate. They throw in an inspiring sales pitch that will move you to tears; a promise to put an end to all your debt problems.
Unfortunately, some of these debt relief programs are elaborately crafted scams. Companies or probably an individual posing as a company, use the consumer's trust and vulnerability. Mostly people who are in too deep with their debts will settle for anything as long as it is a quick fix. In tight situations most of us unconsciously drop our guard down for anything that will solve our problems.
These debt relief programs are crafted by con artists who fail to keep their end of the bargain and give false promises. Instead of paying your debts, you end up owing more than what you already do.
The most common debt relief program is made for credit card and loan payments. Several companies promise to lower your interest rate or reduce the amount you owe. If you fall for their scheme you end up paying excessive fees that they claim are necessary.
Company crisis
The federal trade commission has sued numerous debt relief companies over the last few years. They have discovered that con artists are not the only ones who sweet talk their way into consumer's pockets. Most companies lie to their consumers and misled them.
They use the consumer's trust to sell a deal which in the end would only benefit their pockets. The Federal Trade Commission and Internal Revenue Service have also discovered companies who give counseling services doing the same thing.
These companies would claim and present themselves as non-profit organizations but in fact they are not. They mislead their consumers about their charges. Most of the time they will guarantee that the service is absolutely free or it requires a small fee.
A consumer will mail in a check thinking that it will help pay off his credit card bill only to find out that it's a referral fee. This is one of the schemes that companies employ on unsuspecting consumers. These companies also promise to lower interest rates but fail to deliver in the end when they have your money.
The truth about debt settlement programs
Several companies claim that they can have a one on one negotiation with all your creditors to settle your debt. They convince consumers that they can make a settlement with creditors to lower interest rates. The settlement will be on your favor. Your creditors will drop the principal from 50-70%, because of this; your monthly bills will drop into a much more manageable cost or lower.
Unfortunately this is impossible. Companies can't initiate a negotiation and your creditors wouldn't agree on a settlement either under any circumstances.
A better option for a safer pursuit
A safer step is to approach a credit counselor. They require no fee and will help you to come up with a plan to pay your credit card debt. Instead of pitching in a program they will help you to figure out a suitable plan.
Credit counselors work with debt ridden individuals. They will give you a free assessment and evaluation of your financial situation. This will also give you an opportunity to find out if you really need debt management.
Before you jump in to any debt relief programs, do your homework and research. People fail to realize that there is no quick fix. Shop for legitimate companies and ask fees upfront. You should not pay more than $50 for the set up fee and $25 for monthly maintenance fee.
Source: http://EzineArticles.com/?expert=Nathalie_Fiset