You are here: Home Finances Credit: Score, ... Debt Negotiation ... Before You Do Business ...
Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
Information about all aspects of health care from choosing a doctor and treatment, staying safe in a hospital, to end of life care. Includes how to obtain, choose and maximize health insurance policies.
Answers to your practical questions such as how to travel safely despite your health condition, how to avoid getting infected by a pet, and what to say or not say to an insurance company.

Debt Negotiation Programs (Also known as Debt Settlement)

Before You Do Business With A Debt Negotiation Firm

« Previous


Check services and fees

Find out what services a business provides and what it costs.

  • Do not rely on verbal promises. Get everything in writing.
  • Read your contract carefully. Preferably have a lawyer look it over as well. You may even be able to find a lawyer who will work for free. (See the document in "To Learn More."
  • Reputable companies charge a fee based on the money they save you - plus modest fees to start. For example, a few hundred dollar fee plus 15 - 25% of the amount of money the company saves you.

Some companies guarantee to loan you money if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow-up on these advance-fee loan guarantees. Legitimate creditors never guarantee that a consumer will get a loan - or even represent that a loan is likely.

Consider whether the company warned you of the downside of debt negotiation.

For instance: 

  • If the company wants you to stop making payments to creditors, did it warn you about the consequences described below?
  • Did it tell you that any forgiven debt may be taxable income?

Think twice before stopping payments

Some debt negotiation firms suggest you stop making payments while they negotiate a reduction in the debt. You do not have to agree. If you do stop making payments while a reduction is being negotiated:

  • Late fees and interest are usually added to the debt each month. In fact, late payment may even cause the interest rate to increase. If the total debt exceeds your credit limit, additional fees and charges can be added. The result can be that your original debt doubles or triples.
  • Your credit score will be hurt, perhaps substantially. (If you are already behind on your payments, the impact on your credit score will be less since the late payments are already likely reflected in your credit score.)
  • You will get calls from collection agencies and you may even be sued by your lenders.

To Learn More

Please share how this information is useful to you. 0 Comments


Post a Comment Have something to add to this topic? Contact Us.

Characters remaining:

  • Allowed markup: <a> <i> <b> <em> <u> <s> <strong> <code> <pre> <p>
    All other tags will be stripped.