Debt settlement companies offer consumers a way to eliminate their debt for less than what is owed. These companies have advantages and disadvantages, and these should be weighed carefully before contracting their services.
Services
Debt settlement companies contact your creditors on your behalf and attempt to negotiate settlement agreements for your oustanding debt.
Cost
Debt settlement companies typically charge a flat rate fee, usually a percentage of the balance owed or of the forgiven debt. They may also charge an initial signup fee and/or a monthly fee.
Advantages
Debt settlement companies negotiate directly with your creditors, saving you the stress of having to deal with debt collectors.
Disadvantages
The fees can be exorbitant and a debt settlement company cannot protect you from a creditor lawsuit. Debt settlement scams are rampant in the industry and it can be difficult to find a reputable company.
Conclusion
Debt settlement companies can negotiate with your creditors on your behalf, saving you time, money, and unnecessary stress. However, if you're comfortable dealing directly with your creditors, negotiate debts on your own and avoid unnecessary costs.
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