A while back Scott Crawford, CEO of DebtGoal, listed some of the most significant pros and cons to the debt settlement option. One of the cons to taking the debt settlement route that wasn’t mentioned is the chance of getting scammed.
The problem with debt settlement is mulitfold, but hinges around the total fees and charges that you can end up paying to a debt settlement company for services that can, quite frankly, be overpriced and of less value that initially thought. The high cost coupled with the weak track record of getting people out of debt highlights another problem: that simply paying a debt settlement company for their services will not on its own solve personal financial problems.
Alternatives?
One sensible alternative to debt settlement is to simply do things on your own: address the underlying problem to staying in debt, which starts with setting and living by a budget, trimming expenses, and applying the excess amounts to a prioritized set of debts, aggressively paying them off in the most optimized way possible. But make sure to go beyond the initial setup: track all efforts and progress made towards debt reduction. Evaluate your basic strategy every fews months and retool it if necessary.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
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