Because it is a struggle to get out of debt, it's not unusual for people to seek help in debt elimination. One option is to get assistance with debt settlement. Debt settlement means that you approach the credit card company and ask to pay only a portion of what you owe.
Settlement Companies
Most assistance for debt settlement comes from debt settlement companies. These companies act like middlemen on your behalf, negotiating with your creditors to determine a final settlement amount. In return, you pay them a fee, unless the settlement company is a non-profit organization. Although you can do much of what the debt settlement company does on your own, debt settlement companies have have more experience with negotiation and are familiar with debt regulations. They thus often get better deals than you'd strike with the creditor by yourself.
Regulations
As of 2011, regulations are in place for debt settlement companies that provide financial help. They cannot charge you upfront fees until they have worked with at least one of the debts you have, you have a written settlement agreement between you and your creditor and the you've paid at least one payment to your creditors under the settlement agreement. However, with the exception of Illinois, there is no cap on the amount of the upfront fee.
Before Selecting a Company
Some debt settlement companies are not legitimate and actually prey on those with debt. To prevent getting ensnared by one of these companies, always check the company's ratings with the Better Business Bureau, as well as any certifications the company has that demonstrates compliance with current Federal Trade Commission regulations.
Timeline
Regardless of whether you get assistance from a non-profit or for-profit debt settlement company, debt settlement is not an overnight process. It can take up to four years to complete a debt settlement program.
Considerations
Because certain debts like child support are not eligible for settlement, you cannot always depend on a settlement company to manage your accounts and contact creditors. You may have to hire a competent attorney for these cases. This is not an ideal situation, as attorney fees can worsen your financial stability. You also have the option of getting advice from other financial professionals like your tax agent, bank officers, FTC and other government officers related to finance offices, your local Chamber of Commerce workers and independent financial consultants.
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