Weighing the Benefits of Debt Settlement
For a fee, consumers can get help negotiating lower debts
When consumers with mounting debts get desperate, they often turn to what can seem like their last, best hope: debt settlement companies.
Those companies are taking on an increasing number of clients as more consumers find themselves unable to pay their bills. Bankruptcy filings are up 30 percent over last year, and many consumers have so much debt relative to their income that debt settlement companies decline to take them on as clients. (Credit counselors, who focus on financial literacy and rehabilitation rather than negotiating lower payments, often work on those more severe cases.)
For a fee, struggling consumers can hire a company like Debt Settlement USA, which currently works with around 16,000 clients. Jack Craven, president of Debt Settlement USA, says his clients have between $12,000 to over $300,000 of unsecured debt, which includes credit cards, overdue rent, and utility bills. U.S. News asked Craven to explain the ins and outs of his business. Excerpts:
How does debt settlement work?
People call us to ask about signing up for the program. We help them start the process of saving money and then contact their creditors [on their behalf]. We usually get creditors to accept a 40 to 60 percent settlement rate. This month, we're getting a 37 percent settlement rate. The companies are willing to accept that because otherwise, they could get nothing. Generally, at that stage, people are going to go bankrupt, and it's hard for banks to know what's going on. Hardship clients [people who are experiencing major life challenges that make it impossible for them to pay their bills] don't have much money, and sometimes the bank never gets paid.
Do you also help teach clients how to save money?
We don't give legal advice, but we do tell people how they can save money. We go through their debts and pick which ones they should do first.
Does it hurt a person's credit score to do that?
It can hurt it temporarily, but in the long run, it's better to get out of debt. Around 25 percent of clients who get out of debt do it in a year or less. The other 75 percent do it in a two- to three-year time frame. It takes time to build up funds. We call clients every 25 days, whether we need to or not, to check in.
We urge people to keep one credit card [so they can build their credit score back up by making regular payments]. It usually takes six to 12 months before they can start rebuilding their score.
How much does your debt settlement service cost?
We charge 14 percent of unsecured balance you bring in, payable over 11 months, plus a $29 application fee. So for someone with a $10,000 debt, they will pay us $1,400.
Do you ever turn customers away?
When we first talk, we go over their debts and income. If they don't have enough, we say, "You can't afford to be in a program like ours. Maybe consumer credit counseling would be better."
Reader Comments
Offering Debt Settlement with Class!
You're Making Enough Money in Loan Modification to Pass Up Being a Debt Settlement Affiliate Net Branch Office?
"But You Can't and Here's Why"
As debt settlement statistics tell us, if you're doing really well with loan modification, diversify, and fast, as debt settlement services are needed on a 10 to 1 basis and, there's a double dip in it for you. Imagine, you're able to not only save your clients home, but settle their debt for as little as 50% on the dollar. It's like being saved by a Lifeguard!
Moreover, the value of simultaneously providing debt settlement to your client, so they can more concernedly modify their loan is invaluable. DTI Baby - get their DTI down by settling your client's debt first.
If you're unable to get your clients' mortgage modified because their debt to income ratio is too high, go back over their credit report and add up all of their un-secured debt - credit cards, hospital bills, etc. The summation of these items can average $22,000 and more per deal.
Hello - what you just added up (this $22,000) is the "Debt Settlement Industry" and with fees averaging as high as 8%-10%, it's got enough commission income structure in it to not to walk away from. FYI: the average fees charged to the client, industry wide, is 15%, but the average payout to an affiliate office is 7 1/2% to 8%.
Think about it, you've got the client in your hand, relying on your expertise to save their home, modify their loan, and without blinking an eye, you have one more way to make that possible.
Let's take a closer look;
Read the Full Article: http://www.merchleads.com/debt_settlement_news.html
Debt Settlement
If a consumer wants the best debt settlement representation possible, they need to hook up with a "debt settlement attorney". Attorneys charge the same or even less than most non attorney debt settlement companies. Plus, it's a Federal violation for debt collector to contact a client represented by an attorney. And being in a debt settlement program, you will receive debt collection calls... and they can be vicious. Bottom line... hire an attorney.
Debt Settlement
U.S. Financial Freedom was founded from Debt Settlement, but soon discovered many consumers had more unique needs. We ended up diversifying with an array of programs so we can help as many consumers as possible. At U.S. Financial Freedom, our debt consultants are trained with you in mind. When speaking to one of our consultants, they will assess your current situation, determine which plan or program will best suit your financial needs, and then help you with the enrollment process. All consultations are free of charge with no obligation. We strive in making your life financially manageable through learning and understanding to help you on the road to Financial Freedom.
U.S. Financial Freedom comes out as a Loan Modification specialist in America. Loan Modification is arguably the most effective tool you can use if you are behind on your mortgage and in midst of a financial hardship to save your home from entering foreclosure. We are dedicated to helping you achieve a prompt resolution to your mortgage related debt. We are a one-stop solution for all your needs including; credit card help, mortgage help, bankruptcy alternatives, loan modification, credit repair. At the end of the day, our processing and negotiating team will resolve and find a solution to help our client's financial situation and hardship. Let's Get Started! with the Free Consultation!
Call us On: 1-866-323-0244
Site: http://www.usfinancialfreedom.com
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