Debt settlement is one of the last steps that consumers have when it comes to paying off debt obligations in times of financial distress, but it is by no means the only option or even primary step that an individual needs to take concerning debt relief in their life. However, there have been reports over the past weeks, and even earlier this year, problems continue to plague homeowners despite regulations that were hoped to guard consumers against practices of debt relief companies which may not necessarily have been in a consumer’s best interest.
There are a debt settlement companies that have contacted consumers through a variety of means, but one of the ways that these organizations have created problems is through the use of telemarketing. New rules state that telemarketers that are selling debt settlement services cannot collect upfront fees, but there are other ways which these organizations have gotten around these rules, and some have even gone so far as to go door to door to consumers’ homes in the hopes of getting them to work with a particular organization for debt settlement.
What consumers must understand at the present time is what debt settlement entails and how they can avoid being taken advantage of by debt settlement companies that may not have their best interests in mind. While the topic of debt relief is one that consumers are constantly researching and numerous men and women are in need of information when they fall into problems related to personal debt, but when it concerns a debt settlement consumers must realize that this is an extreme form of debt relief and can do damage to a consumer’s financial life.
In some cases, debt settlement may be necessary for a consumer to avoid defaulting outright, but it can lower a consumer’s credit score due to the fact that they will be working with a settlement company to draw up agreements with various creditors who will, ideally, allow a consumer to pay less than they originally owed on certain debts. This can help consumers find the relief they need in cases where debt management or simple credit counseling do not help, but being proactive about one’s debt situation will usually help consumers avoid this problem.
Also, settlement companies can be bypassed entirely in certain cases by a consumer simply contacting their creditors, explaining their situation, and asking for assistance or a reduced payment plan. While debt settlement will negotiate a lower overall payment that a consumer must make, it usually reflects more positively for a consumer if they will meet their debt in its entirety, even if a management plan where reduced payments each month is required.
When it comes to a debt settlement company or a counseling agency that may implement a debt management plan or simply offer advice, consumers need to be very cautious as some companies have, once again, charged upfront or excessive fees to consumers without offering much help by way of these debt settlement plans. Consumers can research that settlement organizations online and look for proper accreditation, as well as, reviews from past customers to make sure that a settlement program is reputable, but again, working with a debt settlement company is not something that should be entered into lightly as consumers must make sure debt settlement is their only option left and then begin the process of finding the best organization that will work to help a consumer find the aid that is needed for their situation.