“Reduce Your Debt by 60%” Sounds so Good

Posted on November 25 2009

What a great idea, right? You go max out your credit cards and when it’s time to pay them down you choose to pay only a portion back to the lender. This is easily justified for many due to the past business practices of the lending institutions. Maybe you feel like you were taken advantage of or were forced to pay outrageous fees. Nonetheless you feel as though you have been wronged.

If you listen to any talk radio, late night television or search the internet, you can hardly go 10 minutes without seeing some sort of commercial for “debt reduction”. The ads often say they can reduce your debt by 30-60% and it’s legal. Wow, this is perfect. You are able to only pay what you feel you may owe and everyone is happy including the credit card companies. The “Reduce your Debt” companies claim that the credit card companies want and in some cases need to settle with you to “clear their books” due to the recent stimulus.

Well, not so fast. What did someone once say; “If it sounds too good to be true it probably is”? This is usually the case with these “reduce your debt” companies. They may have the most successful marketing on television but yet their product fails to produce. For starters typically they charge very high start up fees. They also do not pay your creditors for sometimes up to 4-5 years. By this time your accounts have all been sold to collection companies and you are susceptible to lawsuits. Next, they do not guarantee their service. When I say this I mean they will not guarantee that working with them will prevent lawsuits and resolve their financial issues. They may tell you they guarantee their services over the phone but when you ask them to give you the guarantee in writing I have not seen one do so. If you have a question they have a great answer. You can very easily feel as though this will cure all your financial worries.

I say take a step back! Look at what you’re being offered. Does it sound too good to be true? Does this seem legitimate? Is the company concerned with your financial situation or is their primary concern enrolling you in their debt settlement program? Do they have an incentive for you to complete the program or do you pay most of your fees at the beginning? Is the company non-profit or for-profit?

When you’re in need of financial assistance it can be very difficult as you are in a vulnerable situation. Be wise and look into all your options. There is never an easy situation when you’re dealing with debt. Consider all your options and do your best to stay away from companies that may feel like sales agents. Often times the best option to consider is working with a non-profit Credit Counseling Agency like Family Life Credit Services. These agencies will work with you to realistically go through a budget and recommend any options available in your situation. The counselors should have no incentive to enroll you into a program and their monthly fees for specific program would be reasonable.

For any additional questions or concerns please feel free to contact a counselor at Family Life Credit Services. They can be reached at 1-800-747-9307 or www.familylifecredit.org.