Posted on May 21, 2009 at 3:15 pm I posted a previous thread in regards to collection calls that I am dealing with. Ultimately I need to resolve my old debts to get these people off of my back! One person in the previous thread suggested that I look into debt settlement since my two accounts were pretty far past due. Does anyone know if these debt settlement companies are really legit?

Posted on May 21, 2009 at 3:59 pm Yes, debt settlement is a legitimate option. In terms of debt settlement companies, as is the same with every industry, some are better than others. There are some things you want to look into before selecting a debt settlement company to represent you. The first thing you would want to do is check with the Better Business Bureau (BBB) to see if they are a member, and what their BBB grade is. Another thing you can do is check to see if the company is a member of The Association of Settlement Companies (TASC). If they are not a member of either, that should probably send up a red flag. Some additional questions you may want to ask: 1) Do they operate in your state? 2) How long have they been in business? 3) What is their experience negotiating with your creditors/collectors? 4) What are there fees? These suggestions should get you on the right track if you are really looking to find a reputable debt settlement company.

Posted on May 21, 2009 at 4:32 pm Ok- I just spoke with a representative from a debt settlement company who I found through the BBB website. They charge 15% of the total debt amount, plus a one time set up fee of $250. Is this standard? Oh yeah- also, the fees are spread out over 1 year and they told me those are included in my monthly payment. Again, I do not know if this is standard so any insight would be greatly appreciated!!!

Posted on May 23, 2009 at 1:59 am I haven't heard of many companies charging $250 to set up an account, plus 15% of the debt amount.  Also, having all the fees paid in the first year is pretty lopsided.  Most companies will spread the fees out over at least 18 months. 

Posted on May 24, 2009 at 12:13 pm I agree with Monaco29. From what I understand the majority of debt settlement companies will charge 15% of the total debt amount. The other common fee structure that settlement companies use is to charge a percentage of the settlement amount. Usually, these companies will take 20-25% of the settlement amount and some (using this fee structure) will require a one time payment up front. Another thing that you may want to ask is if the company breaks their fees down into a "retainer" fee and a "service fee." For example, companies who charge 15% of the total debt amount may charge the 5% (retainer fee) over the first few months and the 10% (service fee) over the next 15 months. As a result the majority of your monthly payment would go towards the retainer fee in the first few months of the program and may not be saved up for the first settlement.

Posted on July 6, 2009 at 4:47 pm To address the original question of do debt settlement companies really work- yes, some debt settlement companies really work. And, it would be fiar to mention that others probably do not have your best interests in mind (as is the case in any industry).  Debt settlement though should be judged more accurately on an account to account basis. For example, you may be past due on 5 accounts. It is possible that you will have the money to settle 4 of the 5 accounts, but were forced to set up a payment plan on the last account. This would happen, for example, if a creditor pursued legal action to collect the debt and you did not have the money to settle, but wanted to resolve the account as quickly as possible to avoid a judgment being executed against you.

Posted on August 20, 2009 at 4:08 am Do debt settlement companies really work? How?If the consumer's total amount owed is $10,000 and above and the accounts are past due, he/she qualifies for the settlement program.The debt settlement company negotiates with the creditors- to have the consumer's principle amount of debt reduced to more or less half its original amount.

Posted on August 20, 2009 at 4:16 am How do debt settlement companies really work? To add to that, the settlement company will set up a monthly payment program that the consumer can afford. It would be put on an escrow account where funds are to accumulate.  Some debt settlement companies would agree that the savings be done on the consumer's own savings accounts. If it is on an escrow account, most settlement companies would have it set up under the consumer's name, where the consumer continuously  deposit, as the settlement company negotiates with the creditors(one account at a time), until all accounts are settled.

Posted on August 20, 2009 at 4:17 am Do debt settlement companies really work? For who?

Posted on August 20, 2009 at 4:23 am I suppose it works for all:The credit card companies - they held a meeting several months ago in which they announced that they are now willing to negotiate and settle with the consumers. Unlike the previous months or years. They realized that it's better to get something rather than nothing in recession.The debt settlement industry - if the previously cold shouldered credit card companies are now willing to talk to them, then that is good business.The consumer - if credit card companies are now willing to negotiate and settle the debts, either via the consumer or a third party settlement company, then the consumer would have his/her unsecured debts relieved -- without getting sued or filing bankruptcy.