Get Out Of Debt

Consumers struggling with a high debt burden are reminded that research is required before enrolling in any debt relief program. While there are hundreds of legitimate companies that can help individuals eliminate their debt, there are also plenty of scams circulating within the industry which should be avoided. Before enrolling in any program it is important to investigate the company and the process they claim to use to eliminate debt. Here we are going to take a closer look at a potential scam that has cost some consumers hundreds or even thousands of dollars.

What is the National Debt Relief Program Scam?

It appears many consumers have received a letter in the mail claiming to be from the National Debt Relief Program. Victims of this scam have stated the letter at first glance appears to be from a government agency. Upon closer inspection it becomes clear the letter is not from a government agency but rather GHS Solutions, a debt settlement company. Jennifer Wallis is a Consumer Credit Counseling Service employee in central Oklahoma. She has clients who have received this letter which states the National Debt Relief Program can “reduce monthly payments by up to 50 percent”. Why is this letter considered a scam? Since the letter is designed to look like correspondence from a government agency, many consumers fail to realize it is actually from a debt settlement company. The information is misleading and many consumers who are desperate for a solution to their debt problem may enroll in a program that can have serious negative consequences.

GHS Solutions is a debt settlement company based in Delray Beach, Florida. The Better Business Bureau has given the company a F rating and reports 102 consumer complaints in the past three years. Of the 102 total complaints against the company, 88 are about the company agreeing to perform according to their contract.

GHS Solutions is not the only debt settlement company linked to the National Debt Relief Program scam. It appears consumers have also complained about a company named National Debt Relief and the program they offer to consumers. In this instance consumers have actually enrolled in the program and claim the company did not perform as promised. Clients claim National Debt Relief failed to stop collection calls and did not begin negotiating debt immediately. Other complaints claim the company misrepresents itself to appear like a government agency which leads consumers to believe they are working with a government program designed to assist individuals facing financial hardships.

It is important for all consumers to understand what type of debt relief program they are committing to before moving forward. Debt settlement is a legal process where individuals or companies hired on their behalf, negotiate with creditors to reduce delinquent balances in order to eliminate debt. Anyone considering this process must thoroughly research both the method and any company they consider hiring. There are several risks involved in the process however it can be the best option for people facing a serious financial hardship who would otherwise have to look toward bankruptcy to address their debt situation. It is unfortunate that some debt settlement companies continue to mislead or misrepresent themselves in order to enroll clients in their programs. Consumers are urged to carefully read any correspondence as well as contracts prior to enrolling in a debt settlement program to avoid confusion and disappointment down the road.

When it comes to seeking debt relief, many Americans feel the only viable option they have is credit counseling or filing bankruptcy. What many people are not aware of is the little known process of debt settlement. The goal of debt settlement is too, one satisfy your creditors for less than what they claim you owe and two save you as much money as possible during the process.

One reason many people choose a debt settlement company is because their debt amounts are too high for them to realistically manage to payback in full and want to avoid bankruptcy. Another reason why thousands of Americans choose a debt settlement company is because they are extremely upset and fed up with the credit card company over the fact that their interest rate has increased to an unfair high rate like 28 – 30% and the company refuses to lower it no matter how much you plead.

But the number one reason why Americans choose a debt settlement company is because their desire to have closure on being in debt and their priority of becoming debt free becomes their number one goal and it outweighs any real or perceived thought of any negative impact that it could have on their credit history while going through the process of debt settlement.

According to the Fair Isaac Company your debt to credit limit ratio accounts for more than 30% of your score, so it becomes absolutely essential to eliminate your debt first when you are trying to improve your credit score. Also remember your credit report is only a snapshot in time and is never a permanent record, you can recover and improve your credit score over time. Everyone gets a second chance in America!

The banks would love to keep you in the mind set that your credit score is absolutely the most important part of your life and by not paying them back in full would decrease your score and put you in the gutter forever. By all means your credit is important but should not completely dominate your life. This mentality works in the banks behalf and keeps you in fear, just where they want you.

But think about it, if the banks where really were concerned about you and your credit score then why would they extend you more credit on your current credit card so you can charge more when they know that this will decrease your score. So do they really care, NO.

When researching the option of debt settlement as your choice to become debt free understand that there are basically two types of companies to use when considering who you will choose to settle your debts. First there are the very common non-lawyer based debt settlement companies which comprise of over 95% of the companies currently advertising over the internet and TV. The rest are law firms that practice debt settlement as one of their services.

In the rest of this article I am going to list some of the major important points that you need to consider when choosing a debt settlement company to help you become debt free. As well as give you a warning sign for each point when speaking with the representative of a debt settlement company.

1. The company should save you at least 40% of your debt including fees and paying your creditors.

You can usually save 20% on your own with very little effort but any more than that requires experience and negotiating savvy.

Warning Sign:

When you are speaking to the representative from any debt settlement company you need to be cautious and do your homework. There are many debt settlement companies that just want to make as much money as possible without any real regard for the clients best interest. A lot of these representatives will say just about anything that pleases you to enroll you in their program. One way to recognize this type of company is by the tactic of setting a monthly payment amount to whatever the client wants. Usually very low and for a much longer period of time than what other reputable companies offer. This defeats the purpose of their claim of saving huge amounts of money because the interest keeps growing and the consumer does not realize that the longer the payback plan time frame the less they save.

Most Americans are getting caught in the magic bullet or quick fix syndrome, which these unscrupulous companies’ operators understand all to well and sign up tens of thousands of trusting people each year. If the representative is saying that they will save you over 60-70% of your debt be wary, at first it might sound great but verify what the overall cost is before signing on. Once they add on their fee and include your payback to your creditors it will be a lot less and they never mention this. Make sure to ask the representative if their claim of high savings for you is also including the companies fee.

2. Make sure your payback plan is in a realistic time frame to complete this process.

The major benefit of debt settlement is to become debt free in a very short period of time verses paying minimum payments to the credit card company which averages over 38 years to pay back. You should choose a debt settlement company that will focus and emphasize on enrolling you to becoming debt free in two years or less, but only under specific circumstances no longer than three years.

Warning Sign:

By stretching a debt settlement payback plan farther than three years you’ll never receive the full benefits that you were told in the beginning. Why, because of accruing interest. In other words the percentage of money your saving on the original debt decreases drastically when you enroll in a program that has you paying for four or five years because the debt amount drastically increases.

3. Make sure the collections calls will be stopped.

One of the negative aspects of debt settlement is that you do need to fall behind in order for these creditors to be willing to accept less. While falling behind you will get barraged with calls from collection agencies. Simply put these can be very annoying, scary, embarrassing, and aggravating. Now when it comes to preventing collection calls from 3rd party collectors, only by retaining a lawyer to represent you will stop them from calling. The Fair Debt Collection Practices Act states that if a client has attorney representation the 3rd party collector by law must deal with the attorney and not the debtor. Once the collector has been notified but continues too contact you directly then the collector becomes subject to a potential law suit.

Warning Sign:

If a representative from a non-attorney based debt settlement company tells that they can stop the collections calls ask them how and why the collector has to abide by what the debt settlement company claims. By law the collector does not have to deal with them. Typically their advise is to send a cease and desist letter, this can stir up a hornets nest. While this may stop the calls it will leave the collector no other option of contacting you to collecting the debt. So if they wish to continue to pursue with their collection attempts they will have to serve you papers to appear in court. Meaning that you will be sued.

4. Make sure the company is reputable.

A good place to start is to check the Better Business Bureau (BBB). Next thing to consider is how long the company has been in business. A general rule of thumb is to look for a company to have been in business for over 10 years. Thus ensuring that they know what they are doing and have settled many people’s debts in the past. What the scam operations do is open up as ABC company put through hundreds of people on their program that they know are not qualified for debt settlement just to take fees. Once they have these people complaining about not doing the right job they close down and start up somewhere else brand new as XYZ company. So if the company is brand new within a year or two that may raise a red flag and should be a major concern.

When it comes to law firms you have an extra layer of protection, the bar association. Check the state bar for the attorneys standing if you are going with a law firm. The attorneys are held to a higher standard by being a member of the bar association. With unanswered complaints to the bar an attorney can lose his/her license and business. The attorney cannot get another law license and just open up somewhere else. So it is in their best interest to do the best job for the client.

Warning Sign:

This is pretty obvious, if a company has an unsatisfactory record with the BBB and is not a member it would be best to stay away. If a law firm is not in good standing with the bar in other words under investigation, then stay away. If the company is relatively new and is showing some of the warning signs mentioned above, definitely stay away.

While debt settlement can be a very smart and viable option for many you need to be very cautious about the organization you are employing. By following the points and warning signs above you will greatly reduce the risk of being enrolled into a program that will not benefit you.

Over the years, credit card debt has become a problem of near-epidemic proportions that has swept across the United States. In 1990, the average American household had around $3,000 in credit card debt – in the following years that number has almost tripled to an average of over $9, 800. For many Americans, credit card debt is a harsh reality that worries them every day and drives them to despair at the thought of ever getting out of debt. If you struggle with credit card debt you no longer have to struggle alone – a solution exists in the form of credit card debt consolidation which can help the average American to eliminate a portion of his debt and to pay off the rest in a relatively short period of time.

Credit card debt consolidation is an option offered by many debt settlement companies to help consumers get out of debt. Instead of throwing away money on payments made toward high interest rates, you will be able to make a single monthly payment to your debt settlement company and get out of debt faster. This is made possible by taking out a debt settlement loan with a debt relief company. The debt relief company will contact your creditors to waive late fees and renegotiate the amount you owe – most debt settlements result in a reduction of the consumer’s amount of debt by 40% to 60%.

Once a settlement has been reached, you will simply pay off the amount in a single payment each month to your debt relief company. The company will then pay each of your creditors, freeing you from the burden of collection calls and the stress of having to deal with your creditors ever again. A credit card debt consolidation loan can provide you with a lower interest rate that remains constant, so with each payment you make you will actually be able to see the amount of your debt getting lower.

Applying for a credit card debt consolidation loan may not be the best option for everyone, so if you are considering it ask yourself the following questions. Do you want to reduce your number of monthly payments? Do you want to reduce the amount of debt you owe and the interest rate at which you are paying it back? Do you want to avoid debt collectors? If any of these questions apply to you, credit card debt consolidation may be a good option to consider. Before making a decision, however, it is important to do some research about various debt relief companies and find the one that is right for you.

Once you have made the decision to take out a credit card debt consolidation loan, be sure to find a trustworthy company or institution from which to take out your loan. Look out for unsecured loan options because they may involve using your home as collateral. Once you receive a loan, be sure to make your payments on time and enjoy the freedom of knowing that before too long you will be happily debt-free.

One way of getting out from under all of your credit card debt is through credit card debt negotiation. In this process, you can contact your debtor and get them to settle your debt for a fraction of what you owe.

Though this will hurt your credit rating, it is a far better option than not paying at all or declaring bankruptcy. Those two options will make it very hard for you to get decent rates on future loans and make it hard for you to get a loan period.

Credit card debt negotiation is a very delicate process, involving a bit of give and take from both sides. You don’t have the money to continue making payments over the long term, but the credit card company wants their money back.

The truth is, credit card companies would rather have you pay something and sever the relationship, rather than keep your debt with them, dragging things out with no intention of paying. They don’t want to pay collection agencies to track you down; they would rather just cut their losses.

Many times it can help to employ the services of a debt settlement company through a debt negotiation program, but sometimes you can negotiate with creditors yourself and find positive solutions. If the debt negotiation is successful, it will save you not only money due to reduction in APR but also the hassle that is associated with looking for a new credit card to transfer balance.

If you are negotiating credit card debt by yourself the first thing that you need to do is find a proper mailing address for your credit card company to send all correspondence to. Don’t use the address on your bill, as that is for payment only. Once you have an address that is where you should send all correspondence regarding your negotiations.

Make sure you use registered mail with receipt. This paper trail forces the debtor to honor anything you can verify with mail, as opposed to phone calls, which mean nothing in court, should it come to that.

Also, it is imperative that you stay calm and conduct yourself with professionalism during credit card debt negotiation. Your debtor may try to verbally bully you, but don’t fall for any of the old tricks. Simply express your desire to settle your debt, no more, no less. Don’t include any personal information, such as why you want to settle, as that will likely get you denied.

In the end, you simply need to realize that although you got yourself in this situation for whatever reason, there is a way out. Systems have been put in place for situations such as yours; you just need to avail yourself of them. Regardless, it doesn’t hurt to call up your credit card company and ask, just make sure you follow up that call with registered mail.

Rising costs and layoffs have meant that there are now more people in debt than ever before and some of these people are turning to debt settlement companies, also called debt negotiation firms, in an attempt to solve their problems. However, before you sign your name to anything you should do some research and take care not to get caught in the scams that are out there.

It is all too easy for the novice to get confused between debt settlement and debt consolidation; they are not the same things. Many debt settlement companies will talk to you about setting up an account and then charge you hundreds of dollars for doing so — thereby adding to the debt that you already have. Debt negotiation services will also charge you a service fee every month, the amount varies depending on the company and on the amount of money that you owe.

Most debt settlement companies do not make monthly payments to your creditors. The money that you give the company is put into a trust account, then they negotiate with the people that you owe money to and when there is enough money in the account pay off the full debt.

You may owe a lot of money on your credit cards and if you stop paying then the credit card companies will add late payment charges as well as the interest accrued on the debt. A good debt settlement company would contact your creditors and try to get the interest frozen so that you could pay off the debt, but most of these companies don’t do that.

If you do decide to use a debt settlement agency then you should ask exactly what they are going to do for you before you sign anything. Many of them don’t make it clear exactly how they operate. They don’t ask for interest to be frozen for example, and they don’t always contact your creditors.

If they don’t contact the creditors and neither do you, then, while you are waiting for your payments to accrue in a trust account so that they can be paid, your creditors will take you to court and they could have your wages garnished. Meanwhile, you are trying to pay off the debt, and pay a monthly fee to the debt arbitration company thinking that you are getting out of debt. In reality you can end up deeper in debt.

Before you get involved with any debt settlement company try contacting your creditors and ask whether they will freeze the interest so that you can pay off the debt more quickly — most will do this for an agreed period, giving you the chance to at least reduce the debt. Some debt negotiation companies know very well that the money they are taking from you every month for your creditors will not cover the debt — especially once they take their payments off of the top.

This is not to say that all debt settlement companies are out to fleece you of your money when you can least afford it, but it does mean that you should take great care that you know what you are getting into.