Debt Settlement Companies
Many companies offer debt settlement services. However, these companies according to their clients do not always thoroughly explain how long it will take to eliminate debts using the debt settlement company They often do not thoroughly explain that the creditors can and sometimes do still continue collection activities including filing collection lawsuits and taking judgments after the client begins the debt settlement program. The debt settlement companies often do not evaluate whether bankruptcy is a better alternative for the clients of these debt settlement companies, which it often if not usually is.
Debt settlement companies typically agree to take a monthly payment from the client, some of which may be taken as fees for service, and some of which are set aside to settle debts. The debt settlement company will make settlement offers to each included creditor and will eventually settlement each debt for a little less than 50% of what was owed on the debt. The bad news about using debt settlement companies is that it typically will take several years for the debt settlement company to settle all the included debts and that the clients are not protected from collection efforts unlike clients in a Chapter 13 bankruptcy case.
For many clients of debt settlement companies, bankruptcy is a far better alternative, and one which should be explored in a consultation with an experienced bankruptcy lawyer before contracting with a debt settlement company.