Article DetailsSettle Your Credit Card Debts |
| Date Added: November 08, 2011 01:34:59 PM |
| Author: admin |
| Category: Banks: Credit Cards |
Settling Your Credit Card DebtsIf you've maxed out your credit cards and are getting deeper in debt, chances are you're feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce – or even erase – your debt for pennies on the dollar. Sounds like the answer to your problems, right? The Federal Trade Commission (FTC), the nation's consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green. Debt Settlement Companies Many different kinds of services claim to help people with debt problems. Among them are "debt settlement" companies that say they'll negotiate with your creditors to reduce the amount you owe. Some debt settlement companies claim that they can arrange for your debt to be paid off for less than the amount you owe – for anywhere from 30 to 70 percent of the balance. For example, if you owe $10,000 on a credit card, a debt settlement company may claim it can arrange for you to pay off the debt for less, say $4,000. But there is no guarantee that debt settlement companies can persuade a credit card company to accept partial payment of a legitimate debt. Even if they can, you must put aside money for your creditors each month. Meanwhile, it may be months – or even years – before the debt settlement company negotiates with your credit card company to settle your debts. And, if you stop making your payments in the meantime, the credit card company usually adds late fees and interest to the debt each month. That can cause your original debt to double or triple. Researching Companies If you decide to pay a company to negotiate your debt, do some research before you choose one. Consider other people's experiences with debt settlement companies. One way to do that is to enter the company name with the word "complaints" into an Internet search engine. Read what others have said. You are making a big decision to spend money that could go toward paying down your debt. Debt Settlement Fees Companies that sell debt settlement and other debt relief services by phone cannot charge or collect a fee before they settle or reduce your debt. If you do business with a debt settlement company, you may be required to deposit money for the company's fees and potential settlements in a dedicated bank account, which will be administered by an independent third party called an account administrator. The account administrator may charge you a reasonable fee, and is responsible for transferring funds from your account to pay your creditors and the debt settlement company when settlements occur – as long as: the account is at an insured financial institution; you own and control the funds (and any interest accrued), and can withdraw them at any time; the debt settlement company doesn't own, control or have any affiliation with the account administrator; the debt settlement company doesn't split fees with the account administrator; and you can stop working with the debt settlement company at any time without paying a penalty. If you decide to end the relationship with the company, it must return the money in the account to you within seven business days - minus any fees the company legitimately earned... Read full article Source: FTC.gov |
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