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A Review of: Debt Settlement Could Cost More Than You Think Part 1: Section 1 “The Basics,” and Section 2 “The Problem With Debt Settlement Companies”

In this article featured on Yahoo! Finance, Aleksandra Todorova explores the debt-settlement industry and offers information on the service and the risk. In a financial world wrought with debt consolidation companies wanting your business, Todorova sheds some light on the most popular consolidation alternative.

The Basics
Todorova divulges in her article that debt settlement, in most states, is a perfectly legal alternative to debt consolidation or bankruptcy. Each debt situation is unique and for those finding themselves in foreclosure, unable to make minimum payments on credit cards or on the verge of bankruptcy, debt settlement is a viable option.

Todorova quotes debt-expert, Gerri Detweiler, advising her readers that creditors would rather settle for a lower amount, typically 20 percent to 75 percent of the debt, than receive nothing from a bankruptcy filing.

Outrageous Fees – Well, Not So Much
Our wary author warns her readers of scams and “outrageous fees.” One must remember there are sharks and predators in every industry. These companies, though they may have scorned many, do not represent the debt-settlement industry as a whole.

Debt settlement companies make money by saving you a lot of money. Some have established relationships with creditors and can work to significantly lower how much you owe. Generally, the process is faster than services such as debt consolidation because you pay less than your entire outstanding balance.

Tips:
Know how the program works – talk to a representative. A reputable company will be upfront about what their program entails and how much the service will cost. Understand your current debt situation before you call. Have your most recent bills and statements on hand. The more information you can provide your representative, the more detailed they can be about how they can help you.