Tuesday, January 31, 2023

Is Credit Card Debt Relief Legitimate

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National Debt Relief Vs Freedom Debt Relief

How to protect yourself from scam debt relief companies!

Average savings: National Debt Relief says its clients see savings of about 30%. By comparison, competitor Freedom Debt Relief says its customers see savings of 15% to 35% when including fees.

Minimum debt requirement: National Debt Relief requires a minimum of $7,500 in unsecured debt to qualify, the same amount as Freedom.

Customer experience: The company is accredited by the Better Business Bureau with an A+ rating and around 80 customer complaints in the past three years. The complaints centered on problems with the product or service, billing and collection issues, and advertising and sales issues.

Freedom Debt Relief has more than 350 customer complaints at the Better Business Bureau in the same timeframe.

What Not To Do

Sometimes overwhelming debt comes with devastating swiftness a health crisis, unemployment or a natural disaster. Or maybe it came a little at a time, and now creditors and collection agencies are pressing you to pay, and you just cant.

If youre feeling overwhelmed by debt, here are some things not to do:

  • Dont pay a secured debt late in order to pay an unsecured one . You could lose the collateral that secures that debt .

  • Dont borrow against the equity in your home. Youre putting your home at risk of foreclosure and you may be turning unsecured debt that could be wiped out in bankruptcy into secured debt that cant.

  • Dont withdraw money from your retirement savings in order to repay unsecured debt. This is financial suicide.

  • Think twice about borrowing money from workplace retirement accounts as well. If you lose your job, the loans can become inadvertent withdrawals and trigger a tax bill, which is the last thing you need.

  • Dont make decisions based on which collectors are pressuring you the most that may lead to actions that arent in your best interest. Instead, take time to research your options and choose the best one for your situation.

About the author:Bev O’Shea writes about credit for NerdWallet. Her work has appeared in the New York Times, Washington Post, MarketWatch and elsewhere.Read more

How A Dmp Works

With a DMP, you make a predetermined deposit each month with the credit counseling service. The service then uses the money to pay your unsecured debt, like credit cards and medical bills. The counseling service negotiates with your lenders, seeking a lower interest rate or asking them to waive fees. A DMP only works if you make on-time payments every month for the agreed-upon term.

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Bogus Promises Of Credit Card Help

Many citizens are struggling to pay their credit card bills. The average U.S. household that carries credit card debt owes an outstanding amount of over $16,000. Just ten credit card companies control nearly 90 percent of the credit card market. Credit card companies often seem to raise interest rates for any reason or no reason at all, and itâs not unusual for credit card interest rates to reach nearly 30 percent. At the same time, credit card companies collect billions of dollars in penalty fees from consumers who paid their bills even a day late, exceeded their credit limit by even a small amount, etc.

There are many fraudulent companies seeking to exploit the fact that many consumers are having a difficult time with credit card bills. These companies make unsolicited phone calls to consumers promising to help lower their interest rates or find them better deals. The companies often require the consumer to pay high up-front fees of as much as $2,000 or more. Once the consumer pays the money, however, the companies often fail to deliver the promised services. The end result: the consumer is now $2,000 more in the hole. Remember: there is no easy way to lower your interest rates or get out of debt. Beware of companies that call you up and promise they have âinsider secretsâ on how to lower your credit card interest rates.

How Long Does It Take For A Debt Settlement Company To Come To Terms

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The whole process typically takes 26 to 48 months for the debt settlement company and the credit card company to come to terms. During this time, interest and late feeds will make the total grow. Your late payments get reported to the credit bureaus, your credit score drops, and you might begin receiving collection calls.

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Is Debt Relief A Legitimate Strategy

You cant go another day without doing something about all that credit card debt thats been piling up. Youre weighing your options, which include debt relief. But is debt relief a legitimate strategy? Well, its helped scores of consumers like you back on their financial feet. But dont just take our word for it, lets look.

What is Debt Relief?

Its a financial strategy in which you get a company that specializes in debt settlement another term for debt relief to go to your creditors on your behalf to see if it can get them to let you settle your debts for less than what you owe.

Why would a creditor agree to this, you ask? Well, its mostly because such creditors usually credit card issuers can see that your credit is damaged and that your other option is bankruptcy. If you employ that, theyll likely get nothing.

How Does Debt Relief Work?

After an initial consultation with a company such as Freedom Debt Relief, during which your financial situation is assessed, youll get a personalized plan aimed at erasing your debts. If you look at recent Freedom Debt Relief reviews, youll get a better about such plans.

How Long Does Settlement Take?

It usually takes between two and four years much less than what it would take if youd just make minimum payments. It largely depends on how much debt you owe and your ability to build up savings.

Does Debt Settlement Affect My Credit?

How Much Does Debt Relief Cost?

Isnt the Industry Rife with Scammers?

Learn About The Types Of Personal Bankruptcy

Federal courts have jurisdiction over all bankruptcy laws, so you must file a petition in a federal bankruptcy court. There are two main types of personal bankruptcy:

  • Chapter 13 allows people with a steady income to keep their property. This bankruptcy plan includes allowing filers to keep a mortgaged house or car they might otherwise lose in the bankruptcy process.
  • Chapter 7 is known as straight bankruptcy. It involves liquidating all assets that are not exempt under federal or state law.

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Get A Written Copy Of Your Agreement

If you choose to move forward with a financial relief option, its important to understand the terms of the agreement before agreeing to anything. Once youve accepted a relief option, make sure to get a copy of the agreement in writing.

During the relief period, you want to make sure to look at your statement each month for any errors or inaccuracies, and if you see anything, make sure to refer back to the agreement so you can dispute it.

Next Steps If You Want To Go Ahead With Debt Settlement

Can You Settle Credit Card Debt If You Are Still Current?

Do your research. The Federal Trade Commission helps protect consumers by trying to prevent unfair business practices in the marketplace. The FTC has useful information on debt settlement thats worth reading as you consider debt settlement options.

Pick a reputable debt settlement service provider. Before you enroll in any debt settlement program, the Consumer Financial Protection Bureau recommends contacting your state attorney general and local consumer protection agency to check whether there are any complaints on file. The state attorney generals office can also check if the company is required to be licensed and whether it meets your states requirements.

The Better Business Bureau has consumer reviews of businesses that could help you as you research a debt settlement service provider.

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    Bankruptcy Discharge Of Credit Card Debt

    If you file bankruptcy and obtain a discharge from the bankruptcy court, your credit card debt will likely be wiped out entirely. This is not debt forgiveness, however the creditor has little choice in the matter, and the debt itself still exists. The discharge eliminates only your obligation to repay it. This might matter if you have a cosigner or a co-borrower and that person does not file bankruptcy because that person will still be responsible for the debt.

    Will Debt Relief Hurt My Credit Score

    Debt relief is an umbrella term describing a few techniques used to manage mounting debt. Debt relief actions may have an impact on your credit, but it depends on which method you choose.

    Even if your credit score has taken a hit as a result of financial hardship or mismanagement of debt, it’s not too late to get relief and prevent any further damage to your credit. Read on for more information about various debt relief options and how they can helpor hurtyour credit scores.

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    How Debt Settlement Works

    Debt settlement companies may also be known as debt relief or debt adjusting companies. The companies generally offer to contact your creditors on your behalf, so they can negotiate a better payment plan or settle or reduce your debt. They typically charge a fee, often a percentage of the amount youd save on the settled debt.

    Learn more about different types of debt relief and how they work.

    The company may try to negotiate with your creditor for a lump-sum payment thats less than the amount that you owe. While theyre negotiating, they may require you to make regular deposits into an account thats under your control but is administered by an independent third-party. You use this account to save money toward that lump payment.

    While they negotiate, the debt settlement company may also advise you to stop paying your creditors until a debt settlement agreement is reached.

    Once the debt settlement company and your creditors reach an agreement at a minimum, changing the terms of at least one of your debts you must agree to the agreement and make at least one payment to the creditor or debt collector for the settled amount. And then the debt settlement company can begin charging you fees for its services.

    Keep in mind that there is no guarantee the company will be able to reach a debt settlement agreement for all of your debts.

    How to ask for help when youre struggling financially.

    Scam #: Charges Fees Up Front

    Debt Relief Services Scams

    In 2010, the Federal Trade Commission passed a ruling that prohibits debt relief companies from charging upfront fees. While you will need to pay a fee for debt relief typically on the debt you enroll or your total savings a debt relief company cant charge you until after it reaches a settlement with at least one of your creditors. Any company that wants you to pay before you have proof of a settlement is a scam.

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    Signs Of Debt Relief Scams

    In a nutshell, working with a debt relief company is risky and expensive. So, you should be suspicious of any company that tries to convince you otherwise.

    Before signing you on as a client, any legitimate debt relief company should explain their fees, the potential outcomes of using their services, and other costs of working with them. As part of their enrollment process, they should conduct a detailed review of your finances and review potential outcomes for you.

    Beware debt relief company that use any of the following tactics:

    Before engaging any debt relief service, it’s always wise to check with your state’s attorney general and consumer protection agency.

    Are There Any Legitimate Credit Card Debt Relief Companies

    I owe $35,000.00 in credit card debt. Im making the payments now but wont be able to for long. My credit score is down to 640 due to my D/I ratio. Since my credit is already going down, I wonder if I should contact a debt relief company to at least put a term on the debt.

    Are there any legitimate credit card debt relief companies?

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    What Is Debt Relief

    When a borrower has trouble meeting their financial obligations, lenders may offer relief in the form of “breaks.” Those breaks can lead to lowering or eliminating the interest rate, forgiving penalties, or slashing the principal due on a loan. Not every lender is willing or able to offer relief, but for those that are, it is often because they would rather collect some of the debt than lose it to a bankruptcy court.

    Are Debt Relief Programs Really Worth It

    National Debt Relief – #1 Credit Card Debt Company – BBB Accredited Business

    Working with a legitimate debt relief company can be valuable, but keep in mind that:

    • You can negotiate with your creditors yourself to settle your accounts.
    • Settled accounts appear on your credit reports for up to seven years and have significant negative impacts on your credit scores.
    • High fees mean that debt settlement ultimately may not bring you major savings.
    • The portion of debt that’s forgiven through the debt relief process may be considered taxable income, and could boost your federal income tax bill.

    The decision of whether to work with a debt settlement company is a personal one, but if you’re considering it, it’s important to go into the arrangement with your eyes open, and with confidence in the company you choose. Check into the company’s background, ask plenty of questions, and trust your instincts if the answers don’t seem credible. Monitor your credit report, which you can do for free with Experian, to understand where you’re at and how any debt settlement actions affect your payment history and thus your credit score.

    Before seeking debt settlement, it may be worthwhile to work with an accredited credit counselor, who can review your debts and financial situation and lay out all your options, including where debt settlement services might fit in, if at all. Consulting a credit counselor can help you understand where you may need help without pushing you into a risky plan that could hurt your finances for years to come.

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    How To Report A Scam

    If you think you may have been a victim of a scam, you should file a report with the FTC and your state attorney general.

    File a report with the FTC

    To report a debt relief scam, you can visit the FTC Report Fraud homepage or call the FTC Consumer Response Center at 877-382-4357. You will need to answer a few basic questions about the scam, including:

    • Any money you paid or sent.
    • How you paid or sent those funds.
    • Most recent date you paid or sent money.
    • Company name.
    • Full name of person you spoke with.
    • Any information you have about the company.

    File a report with your state attorney general

    You may also want to find your state attorney general or Division of Consumer Affairs and file a report. The exact process will vary by state, but you should be able to call or email both offices to get started on a report.

    Make Your Minimum Payment If Possible

    This may be difficult guidance if youve lost your income and youre having to prioritize your bills. There may be cases, though, where you get financial assistance from your credit card companies, but your interest continues to accrue. If this is the case, making the minimum paymentand making it on timecould help ease the burden later on.

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    Freedom Debt Relief: Best For Credit Card Debt Relief

    Freedom Debt Relief is one of the best debt relief companies in the industry with more than 650,000 clients and over $10 billion in debt resolved since 2002. In fact, many clients wind up paying 50% or less of the amounts they owe.

    Based in California, Freedom Debt Relief is the largest debt settlement company in the United States, currently employing over 2,000 highly trained professionals. Freedom Debt Relief is accredited by both the American Fair Credit Council and the International Association of Professional Debt Arbitrators and has earned a B rating from the Better Business Bureau.

    Adept at settling private unsecured debts, Freedom Debt Relief can settle debts from credit cards, medical bills, and certain student loans.

    When you sign up with Freedom Debt Relief, youll receive a free consultation with a certified debt relief specialist who will discuss your financial situation with you. The consultant will then create a debt settlement plan thats tailored to you and ask you to save a specific amount for the settlement in a separate account.

    One feature that makes Freedom Debt Relief one of the best debt settlement companies around is its interactive interface. When you start making deposits, youll get access to a client dashboard that you can use to track your progress. In addition to how much of a dent youve made in your debt, youll see any progress the company has made negotiating with creditors on your behalf.

    Is Debt Settlement A Good Idea

    How Legitimate Debt Relief Programs Can Help Reduce Credit ...

    If youre carrying a lot of debt or high credit card balances, youve probably seen the advertisements from debt settlement or that promise to help you settle debt for a tiny fraction of the amount of money you owe to creditors. But is debt settlement a good idea? And what are the benefits of debt settlement over other ways of resolving your financial difficulties? Heres a short introduction to Is debt settlement a good idea? that offers a quick overview of this debt relief strategy.

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