There’s a lot of controversy around debt relief companies these days. Many notable finance specialists advise against taking these companies up on their offer. They say more often than not, the indebted will fall into an even greater debt .
These companies entice people with some very persuasive offers.
- Cut your monthly payments in half!
- Reduced rates of interest!
- Pay less than 50% of what you owe!
- Clear your debt within 6 months!
This appeals to many people, as you can probably understand. These companies appear able to really help you out. But don’t fall for it. They’re not in it to help you. They want to make money, just like everyone. They want you to pay them money instead of your creditors.
Debt consolidation companies, for example, will lend you the money you need to pay off all your debts. While this does have many benefits, you usually end up paying these companies hundreds to thousands of dollars more in the long run.
Because they have you pay them a fraction of your former monthly payments each month, you stay indebted to them for a significantly longer period of time. And even though they usually present you with lower interest rates, the sheer longevity of the debt will grow your debt into a more substantial sum of money. Go online and get a debt consolidation quote from these companies, if you really can’t make your current monthlies.
Another example are debt settlement companies. Their carrot on a stick is a significant debt reduction. Of course, who wouldn’t want their debt to shrink, right? However, the method that these companies use entails not paying your creditors for a long time. This really hurts your credit score. These late payments can stay on your record for up to 7 years.
That said, sometimes it can be necessary to get help from these companies. If you really can’t afford to pay off your debts, then check out this article: debt settlement vs debt consolidation. In it the two types of debt relief companies are compared, and you can see which will better serve your needs.
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