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  • February 3, 2021

Be Cautious of Debt Settlement Companies

Debt Settlement

Be Cautious of Debt Settlement Companies

Be Cautious of Debt Settlement Companies 1024 683 Wilmington Senior Center

A debt settlement plan can cost more and hurt your credit. Debt settlement companies are different from nonprofit credit counseling organizations. The companies often claim they can make a deal with your creditors to reduce the amount you owe. They often charge upfront fees, which may be illegal. You may end up more in debt than when you started. That’s because most debt settlement companies:

  • Tell you to stop paying your debts
  • Tell you they will negotiate with your creditors and give you time to collect the money you need to pay the settlement

What they might not tell you is that not paying debts while trying to settle them can:

  • Lower your credit score
  • Lead creditors or debt collectors to file lawsuits against you
  • Add late fees and interest to your account, so you owe more. Unless the debt settlement company settles all or most of your debts, the penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves.

Not paying your debts can also hurt your credit score and your ability to get credit in the future. Warning signs of debt settlement scams … think twice about any debt settlement company that:

  • Charges you a fee before it reduces your debt
  • Promises to make your debt go away
  • Tells you to stop talking to the companies you owe money to
  • Tells you to stop paying your debts
  • Tells you it can stop calls from collectors
  • Tells you it can stop lawsuits filed against you
  • Promises your debts can be paid off
  • Says it’s going to use a “government program” to pay your bills
  • Tries to enroll you in a debt relief program without going over your budget first
  • Won’t send you information about the program unless you share personal financial information

For assistance reaching your financial goals, call $tand By Me 50+ for FREE financial coaching:

New Castle County · (302) 601-3896
Kent County · (302) 415-1542
Statewide · (302) 608-2705