An alternative to bankruptcy tops every debtor’s wish list. “Don’t file bankruptcy”, warn debt settlement companies on the radio, feeding that desire. Instead, they want you to pay your money to them. They say they will help you save up a big pot of money and then settle your debts for pennies on the dollar without bankruptcy. The problem with this is that it almost never works. Why?
- While you are giving them your money, you go into default with the credit card companies
- When you go into default, your interest rate goes to the moon
- Your late charges and fees also go up
- You start getting sued
- Your wages start getting garnished
- If you actually “save” enough money to make a settlement offer, you are making it on a much higher amount than you owed before
- If you settle for a discount, the discount you settled for is almost a much as you owed in the first place
- The “debt settlement” company wants a big fee for doing what it did for you.
I listen to these ads on the radio. Do you? The voice is always soft and soothing. They have “secret information” which they are going to share with you – you’re special, right? – just for calling them. They say “Don’t file bankruptcy” and “let us save you thousands.”
I say to you, Debt Settlement Companies are scams and will almost always leave you worse off than they found you.