Before opting for a

debt settlement

with a

debt negotiation

company, you must carefully weigh all pros and cons, as well as dig deep into the issue yourself, because not everything they tell you is true, besides they may not be telling you everything.

 

Here are the things you will undoubtedly be told:

 

- your

debt

will be reduced

 

- your monthly payments will be reduced

 

- your interest rates will be reduced

 

- your late fees and over-the-limit charges will be eliminated or minimized

 

- you will have to make a single monthly payment to the

debt negotiation

agency, which in turn distributes the funds among your creditors

 

- stop making payments to your creditors once you sign up for the

debt negotiation

program

 

- make payments to the

debt negotiation

company only

 

- you are required to pay an upfront fee for the

debt negotiation

services

 

Now, let’s see what you may eventually dig yourself into following the above instructions.

The

debt negotiation

companies most often claim to be non-profit organizations, thus they have no legal right to charge you any fees, especially upfront. The

debt settlement

company may “forget” to inform you of other charges and fees they withdraw from your trust account monthly (usually, it’s 10 % of the monthly payment).

 

Once you stop making payments to your creditors, the late and missed payments are being reported to your credit history and you find yourself on the

bad debt

risk category, with your FICO score decreasing rapidly. No

debt negotiation

agency can erase that record from your credit history if the fact of late or missed payments takes place.

 

What these

debt negotiation

agencies actually do is to hold your payments, so that your creditors think you may have dropped paying at all, or thinking of filing for bankruptcy. So, when your

debt negotiation

company contacts your creditors with the

debt negotiation

request, your creditors are happy to get at least something, rather than nothing.

 

So, you get your reduction on overall amount, or the interest rates, in exchange for the prolongation of the payment period. However, if you do some basic calculations, like the total amount you pay to the

debt consolidation

agency monthly, and the total amount you will end up paying towards your

debts

in the long run, you will see you will owe even more than before the

debt negotiation

. Instead of paying out your

debts

, you’ll be paying to the third party for doing what you can do on your own. Moreover, you will have your credit score ruined.

 

So, think twice before signing up for any

debt negotiation

program.

 

Of course, there are reputable

non-profit debt negotiation

agencies, but they are a minority on today’s market of

debt settlement

.