The Pros and Cons of Settling Your Debts

This is a guest post from John Ulzheimer, a credit expert and senior columnist for Credit Card Insider on the pros and cons of settling debts that appear on consumers’ credit reports. Over the past four years we’ve unfortunately had to become familiar with the term, “short sale,” which is actually a settlement accepted by your mortgage lender. And while mortgage settlements have become a common practice over the past few years, the process of settling other debts, such as credit card debt and debts being worked by collection agencies is a much more established process. Debt settlement works like...

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Debt Settlement Industry Rips Off Consumers

Some 250 “debt settlement companies” pray on consumers who are overwhelmed by debts. Consumers are lured by Internet and TV ads promising consumers their debt problems will cease if they just sign up. Typically, the companies require the consumer to make payments to the company while not making payments on their debts. The companies promise that once a pot of money accumulates in the consumer’s account, the company will settle the debts with the creditors by paying a percentage of the debt. In their sales pitches, the companies omit over the fact that they deduct outrageously high fees, that the...

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