It is not a surprise to learn that debt relief is on the minds of many Wisconsin residents. Overwhelming debt remains a nationwide problem and most people would grasp at anything that seems like a solution. Debt settlement companies offer plans and programs that seem foolproof, but one financial columnist with NerdWallet cautions people to think twice before succumbing to the allure of debt settlement without careful consideration.
Thanks to better regulations and enforcement, debt settlement companies are much less nefarious than they were a few years back. The companies that survived these regulation enforcement efforts largely perform as advertised in that they seek debt forgiveness from creditors. However, caution is still necessary for people seeking debt relief by way of settlement.
According to a certified financial planner, here are a few ways debt settlement companies fall short in helping debtors.
- Because of the interest and late fees that accumulate on debt, the amount debtors end up paying is typically more than the original debt.
- Debt settlement can take several years to negotiate, which may place debtors at risk for litigation related to the money they owe creditors.
- Debt settlement companies often try to dissuade people seeking debt relief from pursuing options like bankruptcy, which often make better sense than settlement.
The main lesson here is to consider all options when you need debt relief. While there may exist circumstances in which settlement is indeed the best option, be certain that you understand exactly how the company is equipped to help you. A bankruptcy attorney can often provide you with insights into debt relief that you have not yet considered.
Source: The News and Observer, “Liz Weston: Debt settlement a bad alternative to bankruptcy,” Liz Weston, Aug. 28, 2017