BBB Offers More Information
The Better Business Bureau is concerned about the number of people
turning to debt consolidation, negotiation or settlement plans without
really understanding what they are getting into. They say that for many
people those terms are simply interchangeable and they don’t have a
clear understanding of what it is they are getting into until it is too
late.
They want people to understand that debt negotiation or settlement is
basically the same thing. The company that you hire will negotiate with
your credit card companies, etc. to get you a discount on what you owe.
Sometimes they can reduce fees, or interest, or even the amount that you
owe. However, many of these companies set up a “payment plan” for you,
where you pay them and they pay your creditors. However, if they are
shady they will take your money and quite often people find that their
creditors were never even contacted.
Debt consolidation is simply taking all of your bills and lumping them
into one debt. You usually end up with a lower monthly bill and interest
rate, but you have to watch how you get it. If you go through a bank,
make sure that you don’t get it for too long a period of time or you
will end up paying more for the bills in the long run. If you get it
through a company, make sure to see what kinds of fees, etc. you are
paying them because you might end up paying more there as well.
All that needs to be said about debt elimination – just don’t do it. The
BBB says that they have not yet found a company that is legal, so just
don’t get involved with these people.
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