Research study! Research! Research!

You will hear me say this dozen of times. As a consumer, it is our obligation to be educated and informed. The lack of education, laziness, or in my case, REJECTION, gets us in trouble.

I pledged to never ever once again be an uninformed consumer. With that in mind, I put all of my efforts into finding the best financial obligation settlement options. I invested 4 weeks and about 40 hours on the phone speaking with different companies.

There is a barrage of information out there. Simply by typing financial obligation settlement into Google, you will get 8,650,000 outcomes. Click on this link.

Insane. It is daunting to choose through these resources and understand what the hell they are offering. I took the time to understand my alternatives. My very first calls were to the apparent huge companies like Credit Solutions, Ameridebt and CuraDebt. However I also checked out a few of the lesser-known companies like Pacific Financial obligation. Here was the basic offer:

* I was to deposit $2000/month into an escrow account.

* The first 6 months of these payments into that escrow account would go towards paying the financial obligation settlement company for their services.

* I would continue to make $2000 payments for approximately 36 months.

* As settlement uses was available in, they would consult me.

* The banks would be paid from this settlement account.

* In 36 months, I would be out of debt.

At first, I was really ecstatic and relieved about an option to my issue.

Below are the estimated savings and expenses from 2 of the business I talked to. As you can see there is an amazing amount of variation. A lot of that deals with the charges and the length of time you take to settle.

CuraDebt Plan

If they got a 50% savings on my $130,000 of debt, it would take 41 months of $2000/month payments to get out of financial obligation. Overall cost consisting of settlements and fees:$ 81,900.

If they got a 60% cost savings on my $130,000 of debt, it would take 36 months of $2000/month payments to leave financial obligation. Total expense consisting of settlements and charges: $71,500.

If they a 75% cost savings on my $130,000 of financial obligation, it would take 28 months of $2000/month payments to get out of debt. Overall expense including settlements and costs: $55,900.

PacificDebt

With $130,000 of financial obligation, it would take 46 months of $2000/month payments to get out of debt. Overall expense including settlements and charges: $90,995.

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Pretty fascinating stuff, right!?! After a few days, I saw something that didn't make sense:

* Prior to I would decrease any of my debt, the financial obligation settlement company would increase my financial obligation usually of $12,000 since they make money first!

* All of the companies state the bank provides their best offers throughout the first 6 months - however according to their suggested schedule, I would have no cash left in my escrow account at 6 months since all of that $12,000 would go towards paying the debt settlement company their costs. Which by the way, is for a service they have not even performed. Let me duplicate this since it is critical.

The very best offers come at the 6-month mark. Even though I would have built up $12,000 in my escrow account, I would not have actually any cash left in there to pay the settlement deal because that money currently went to pay the debt settlement company!!!!

Discuss the contradictions !? In many cases, clients get discouraged at that point. They leave of the program and declare personal bankruptcy. These debt settlement companies prosper on our falling out of the program. They are predatory companies much in the same way the credit cards are predatory loan providers. Remember what I said about informing myself? I would not be a victim a 2nd time around.

So let's review ... this is why most debt settlement companies century services debt are rascals:

* I pay the financial obligation settlement company $12,000.

* In 6 months, the bank makes an offer.

* Considering that I have no money in my escrow account, I ask the bank to spread the payments out over the next 6 months so I can have time to accumulate some funds.

* The bank decreases due to the fact that the majority of their settlement offers have a 90-day payment time-frame.

* Threatened by liens and judgments, I drop out of the program and state insolvency.

* The bank crosses out my debt.

* The financial obligation settlement makes pure revenue.

I proposed this contradiction to the representatives, but their action was foggy at finest. Because I was using the information they gave me to explain this contradiction, they didn't have an answer that made sense. Rather, they deflected my concern by saying they can get a better deal than I can get myself. WHICH IS COMPLETELY UNTRUE BY THE WAY!

It became clear that the rep was simply a salesperson and had no REAL idea about this process. As soon as registered, I would never ever speak with him once again. As I stated in the past, let's take ownership and take control. I fell under the debt trap, but I was not going to fall under the debt settlement companies' trap.

Please do not be so desperate and sustain more debt when you are attempting to leave financial obligation. If you take the time to run the numbers, you will see most programs do not make good sense. An effective financial obligation settlement company will charge a small start-up charge, base their commission on performance AND take their commission AFTER you have actually paid the bank. Sound too excellent to be real? Stay tuned!

In the next post, I will discuss how some financial obligation settlement business are true customer advocates.