What Risks Are Associated with Settlement for Debt Relief?
For New Yorkers and people all across the country, money troubles can develop in a number of ways. Unexpected unemployment can stop a person’s income. Emergency medical procedures can create insurmountable bills. Failing to adequately plan for one’s future can also throw a wrench into a person’s financial health.
When these situations occur some people begin to accumulate loans and credit card debt simply to keep up with their necessary expenses. Those debts can quickly get out of hand, leading those struggling under debt’s heavy weight to seek out paths to financial freedom. Some people choose bankruptcy as a plan to move forward. Others look into settlement as a means to finding debt relief.
According to the Federal Trade Commission, settling debt can be a risky prospect for a number of reasons. First and foremost, a number of disreputable organizations exist that purport to be debt settlement agencies but that are in fact scams. Individuals looking into debt settlement should ensure that their selected providers are legitimate and not dishonest enterprises.
Second, some people fail to adequately consider the terms that their debt settlement agencies establish for repayment. In some cases people are asked to save money over a period of years in order to aggregate the cash needed to pay off some debts. Not all individuals are capable of maintaining such savings plans and have to end their relationships with their debt settlement agencies.
Additionally, not all lenders are willing to settle a person’s debts and therefore debt settlement may leave a person with heavy financial burdens. While a settlement company is working to eradicate some of a person’s debts, other debts may continue to grow as their balances remain unpaid. Individuals should understand how their debts will be addressed in order to best choose a debt settlement agency.
Consumer debt is a problem for many Americans and reputable debt settlement agencies do exist. While those agencies can offer debtors many opportunities to alleviate some of their financial pressures, there are risks associated with debt settlement. Consumer can educate themselves about such risks through further reading on the Federal Trade Commission’s website.
Source: Federal Trade Commission, “Settling Credit Card Debt,” Accessed on August 19, 2014