Engaging A Debt Settlement Firm Can Bring Debt Collectors Down On You.

Debt settlement firms want you to have at least $10,000 in credit card debt. They want $1500-2000 of that $10,000 in fees paid first before they begin working on settling your debt. They tell you to stop paying your credit card and to send those payments to them for their fees and to save for a lump-sum settlement.

If the debt settlement firm says they can get a $5000 settlement for that $10,000 of debt, how long will it take you to saves $7000, which includes $2000 in fees? What happens if they cannot settle with your credit card company? What happens to the account that has not been paid? What happens to the money paid to the debt settlement firm, and what about your credit rating?

$500 a month will total $7000 after 14 months of payments to the debt settlement firm. At that pace it will be over one year before $5000 can be paid (after $2000 in fees is taken) in a lump sum to end the debt. But, that debt may no longer exist because the banks charge off unpaid credit card debts after six months. Then within the year, they sell those bad debts for about 10 cents on the dollar.

What that could mean for you is a junk debt buyer has purchased your account for 10 cents on the dollar before it has been settled. Now, the bank has no incentive to remove their bad-debt listing from your credit report, a mark that will be on your report for seven years.

According to the Credit Card Debt Survival Guide, you will need to be ready for the junk debt buyer?s attempts to collect the debt. If you are not ready, if you are counting on the debt settlement firm and unaware of the debt?s charge-off and sale, you could be ambushed by a debt collector or collection attorney.

So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account.

Matt Highlander spent months researching strategies for credit card debt relief. Read the complete 230-page Credit Card Debt Survival Guide