Can debt settlement companies really settle your debt cheaper or are they a waste of time and money?

Question

Could a person negotiate their debt with creditors on their own?

Answer 1

If your debt is under $4000 and has been in collections for under a year, you may be able to work out a deal with the company if they haven't referred the account to an outside collection agency.
Most debt settlement companies charge a fee to handle your debt.
You may check with the better business bureau to finds out if there has been any complaints regarding the business or to question the validity of a business.
In the google browser, type Debt Management for a list of referrals. .

Answer 2

The one experience that I had with a "non-profit" organization, and the one that my mom used, both were rip-offs.

I sent one company $850, to begin with, they promised a loan after you paid for 6 straight months (which was supposed to settle all of your accounts, and you would only owe them), well first and foremost, I had listed all of my creditors and sent them all of the accurate information, with a signed contract along with the $850 initial payment. I did this for 6 months, just as I had agreed, when it came time for the payoff, they claimed they never received the $850, which was impossible, because they would not even look at you without it. Secondly, after, I sent the canceled check along with all of the canceled checks for a total of $5100, I found out from some of the creditors, they never received any payments on my behalf, some of them did, but then the original finance charges were added again, after I disputed the company, and reported them to the Better Business Bureau, so in my opinion, you can negotiate with our creditors yourself.

My mom situation, fared a little differently, but all-in-all was with the same results. All of her creditors reverted back to the the original finance charges they had agreed to negotiate after the debt settlement company was no longer in the picture. I am sure that many people have had these problems. Lets see how many come up here?

Answer 3

It is better to negotiate debt on your own. Creditors want their money so if you negotiate likely they will listen. The one thing that you want to do if you do negotiate is to request that if you are making payments that the status on your report be marked "paying as agreed" because if not they can still report that you are paying late or settling and that will have an adverse affect on your credit report.

Answer 4

The only debt settlement company that I've worked with was a waste of time. The amount we sent to them each month was no different than if we'd never called them. I have no idea if it woudl have saved us money... I just couldn't see the difference.

My suggestion- send $5/month EVERY month. If they cash the check 3 months in a row, they've accepted a default payment plan. While you're sending these $5 payments, save up some money, and when you have a comparable amount saved, call and negotiate.

Example-
You've been making those $5 payments for 6 months but still owe 5k on a car loan. The car was repo'd ages ago and the account has been sent to a collection company... Save up 3 or 4k... Call and ask for a supervisor. Tell him/her that you'd like to pay off the total, but you only have 3k (gives you room to haggle!). If they insist on more, "I think I can scrounge up another $500 or so... unless you want me to keep making the payments I've been sending. That's the only way I can afford it." Let them choose. It's really not worth their effort to keep an account open for monthly $5 payments, but collection agencies are paid to be a B****.

If they still want the $5 payments, go ahead and send the next one in... with "paid in full" written on that line opposite the line where you sign the check. If the check is cashed, make sure to get the canceled check from your bank (a certified copy- front and back will do). If you get another bill from them, send a copy of the check- a copy of what you got from your bank... By cashing that check, they've agreed to the "paid in full" condition.

I actually had a loan with a company.... I was pretty behind, and they were calling all the time for a payment over the phone. Well, they called one day, I gave them a payment, then 2 days later, a second payment posted to my checking account (Thank God I was checking that account daily!!).

I called the bank about it, called the loaning company about it. I didn't remember making that second payment, my husband hadn't made any payments, and those were the only ones on that checking account. I made a HUGE stink about it, asked for the audio recording of the call where I had supposedly made this check-by-phone payment- had a guy in one of their centers call me crazy- THAT didn't go over well at all. I told one lady that called, "I know it's not your fault, but I don't trust your employer. They took money out of my checking account without my permission. To me that is theft. Your company stole money from me, and because of that, I'm inclined to never pay them back. I don't do business with thieves..."

They called again, asked me to come into their local office to sign papers for a new payment arrangement. On a loan that was over $5k, they were asking for $50.38/month, 0% interest... They asked me to write why I felt I deserved this consideration. I wrote that they had taken a payment out of my checking account that I didn't remember authorizing, and this arrangement would make that "misunderstanding" easier to swallow...

So now, every month, I take in $51... we're now less than $4500!!

Dunno if there is any way to repeat

Answer 5

Simple Answer

Yes. It is your debt and you are the best person to discuss your debt with the creditor. You know how much you can pay and at what price you wish to negotiate.

Answer 6

It all depends on the nature of your debt and the amount on your debt.
In my resources box there are two articles might be helpful to your situation. Take a look.
The website has a wealth of information about debt settlement too.
Good luck!!

Answer 7

Hi,

The following articles should answer all your queries and clear your doubts:

Debt Consolidation - Get Out Of Debt
http://www.askaquery.com/Answers/qn1643.html

How to Hire a Debt Counselor?
http://www.askaquery.com/Answers/qn1584.html

What is Debt Relief?
http://www.askaquery.com/Answers/qn1583.html

Answer 8

Those places are worse off. They pay more of you debts than you give them. You might be paying less now, but you will end up paying a lot more over time. Those places have to make money somehow.

Answer 9

oh no dont believe them my friend lost 1,500 last december because of them. They will lie to you and ask for a fee no refunds. You can call her she will explain to you what they do to her. never, never, never

Answer 10

I found some good info here.