Part 1 of Big Fat Lies in the Debt Relief Industry
December 14, 20075-Part Mini-course: Lesson 1
The Truth about Debt Settlements and Why They Can Put You Further In Debt
Dear Friend,
If you have searched on the internet for any form of debt relief or credit education, you have probably run across an ad promising you things like: “Reduce Your Debt by 70%” and “Plan to be Debt Free, Debt Settlement”. I know most of us just say “yeah right” and go on with life. However, if you read that ad after you just counted your change to pay for gas, or right after an argument with your spouse over the finances, these ads might get your attention. In fact, these ads lure thousands of people who are desperately looking for a solution. So are they for real? Let’s check them out and see.
If you click on one of those ads you’ll find promises to reduce consumer debts, negotiate with creditors, and stop harassment from debt collectors. These companies offer you the chance to become debt free in a much shorter time. They claim they will negotiate with your creditors and settle for an amount that is far less than what you actually owe. But sadly that rarely happens. Instead, many people are shocked to see that after making many hundreds of dollars in monthly payments, their debts have actually increased and their credit rating has been irrevocably trashed.
You might think these people are naive and deserve what they get. But that’s not the case. When you are buried under a mountain of debt, and your marriage is stressed because of it, almost any promise sounds good. In an effort to save themselves, many jump on these advertisements that offer quick fixes. But instead of becoming debt free, the debt settlement company pockets their fees and usually plunges the consumer deeper into debt. Unfortunately, the debt relief often comes in the form of bankruptcy or debt charge-offs which have long-term negative consequences.
How does it work? After a sales pitch, you enter into a contractual agreement between you and the debt settlement company. You are instructed to stop paying your creditors and cease all communication with them. Instead, you start making your monthly payments to the debt settlement company to pay for their fees. These companies often collect as much as 30% of the total debt owed in up-front fees. Finally, after months and months have passed, the settlement company begins to bring you settlement offers. At this point, you might obtain a vital piece of information that they neglect to tell you upfront. In order to settle your debts you must have cash on hand to pay the entire reduced balance. Most people do not have the means to do this. Therefore, the consumer is left bankrupt while the debt settlement company keeps their fees.
If you are truly seeking to settle your debts, you must meet the following two criteria:
If you don’t meet the above two criteria, then debt settlement is not a solution for you. What you need is a sound financial plan that will guide you step-by-step to become debt free.
High debt levels, the internet, and desperate emotions have opened new avenues for scam artist to take advantage of consumer vulnerability. The Got Guts Wealth Building System delivers a real solution for real people, leading people to financial freedom.
Your next installment of this series will be on debt consolidation loans. See you then.
Sincerely,
Daniel Meek
Creator of the Got Guts Wealth Building System
www.Got-Guts.com
P.S. If you are one of the few who actually qualify for a debt settlement, you can do it yourself. It’s a simple process. You call up your creditors and they will put you in contact with their delinquency department. They will mail you a standard form to complete and mail in. They will then send you a settlement dollar amount you can accept, decline, or negotiate. Warning: creditors can report the charge off to the IRS, which will count the savings as earned income causing tax liabilities.
