Generally speaking the employment of a Debt Settlement Company is risky business. Commonly a Debt Settlement Company (DSC) will require debtors to make significant payments before they take action to settle the debts.
DSC’s will normally withhold the regular monthly payment to your creditors (even though you are making a monthly payment to them) causing late fees, interest and balances to grow. This causes further damage to an already fragile credit rating.
DSC’s have no power to force your creditors to negotiate or accept the debt consolidation plan.
DSC’s have no power to protect you from your creditors. Creditors are free to pursue collection through all measures including the filing of lawsuits and garnishment or wages, bank accounts and tax refunds.
Even if the DSC is successful in obtaining a reduction or forgiveness of your debt it is likely you will receive a 1099 from the creditor; the forgiven debt may be considered as “income” and as a result you may be required to pay tax on that amount.
TALK TO A LAWYER FIRST – MOST OFFER A FREE INITIAL CONSULTATION – TAKE ADVANTAGE!
Before you spend money on a DSC contact a qualified bankruptcy attorney to explore all options for addressing your financial issues. While bankruptcy is not the answer for everyone or every situation it does offer debtor’s court ordered protection from their creditors and the ability to take control of their finances.