Debt Consolidation Or Debt Settlement Companies

I will say right off the bat that I do not like either of these options.  Working with debt consolidation and debt settlement companies is not as cut and dry as they make it seem.  The main reason is that most of these companies will charge you a fee that further adds to your debt.  Also they are charging you a fee for something you can easily do yourself.

  • Interest does not automatically stop
  • Legal action does not stop and can still be taken against you
  • This new company charges you a fee also
  • Often you don’t know what exactly they are doing and is it on the up and up
  • They take a long time to settle the debt
  • Many Collection Agencies refuse to work with them

What exactly do they do you ask?  I have worked with many of them on the collection agency end and here is the shockingly simple albeit drawn out process:

  1. Collection Agency (CA) receives debt and calls debtor
  2. Debtor tells them to call consolidation company
  3. CA tries for days or weeks to call consolidation company
  4. Consolidation company asks for settlement and often ridiculous terms
  5. Both companies go back and forth
  6. CA agrees but then the consolidation company says the debtor doesn’t have money cause they are paying other debt
  7. Eventually both companies agree

Here is the potential bad part about the above.  Clock keeps ticking while the consolidation company causes delays.  Interest keeps adding to the debt.  Any court proceedings continue.

Just call the original lender and they will tell you who to call and then negotiate with them yourself.  If it is close to the original principal then just get a letter confirming payment terms and pay it.  If it seems high and if you just feel like, make them a settlement offer but keep in mind they will need full payment at once or in as few possible payments as possible.

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