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If You Hire a Debt Settlement Firm, Be Ready for Credit Card Debt Collector Phone Calls.

Debt settlement firms expect you to have at least $10,000 in credit card debt.  They expect you to pay them $1500-2000 or more of that $10,000 in fees before they settle your debt.  They also expect you to stop paying your credit card and give those monthly payments to them for their fees and your eventual lump-sum settlement to eliminate credit card debt.

What happens if they cannot settle with your credit card bank?  What happens to the money you have paid them?  What happens to your credit card account that is in arrears? What happens to your credit rating? How long will it take you to save $7000, $2000 for the debt settlement firm and $5000 for a 50 percent lump sum settlement? 

To bank $7000 you will need to save $500 per month for 14 months.  At that rate, it will be over a year before you can settle that $10,000 of debt for 50 percent. The credit card companies typically charge off unpaid debts after six months. They often sell those charged-off debts within the year.

If that happens to you, that means some junk debt buyer has bought your debt for 10 cents on the dollar before it has been negotiated.  At that point there is no reason for the bank to remove the charged-off debt’s bad mark from your credit report, which means it will be there for seven years.

If you are prepared, you can handle the junk debt buyer’s collection efforts, according to the Credit Card Debt Survival Guide.  But if you have placed your trust in the debt settlement firm, you can be blindsided by a junk debt buyer and threatened with a court summons and possibly even be served one.

So, your settlement fee is gone. Your debt is not settled.  You have not eliminated any credit card debt. Your credit is bruised. And, you are fighting debt collectors.  If you are lucky you still have $5000, but only if the settlement firm put it in a third-party escrow account.