The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

Is Debt Settlement Right For You?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Debt
Reading Time: 2 mins read
debt settlement
7
SHARES
117
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

With the average U.S. household owing more than $10,000 in credit card debt, it’s no surprise that millions of consumers are turning to debt management companies or debt settlement firms to become debt free.

However,  there are enormous differences between these two types of organizations. A good debt management company offers free or low cost services, can help you preserve your credit rating, and will teach you to organize your finances and budget properly. It will also successfully negotiate with your creditors to give you financial relief.

By contrast, even with the “best” debt management companies, consumers pay high fees, wind up with serious blemishes on their credit files, and receive little to no financial education.

Additionally, while many debt management firms “guarantee” their work, in reality they have no way to ensure that their questionable techniques and unorthodox negotiating methods will be effective.

Read on to discover the downside to using the services of debt settlement companies – and why using a debt management company is far more advantageous.

The Hit to Your Credit Scores

The primary problem with debt settlement companies is that they typically advise you to stop paying your bills for a few months – sometimes for six months or more. At the end of that period, the debt settlement company goes to your creditors and tries to negotiate settlements on your behalf.

The logic used by debt settlement firms is simple: They figure that after a few months of not getting paid, your creditors will be so eager to receive some money (instead of no money) that these creditors will gladly settle your debts for pennies on the dollar.

If only it were that easy.

The problem with this is strategy is two-fold. First, you wind up with serious black marks on your credit reports and you decimate your FICO credit scores. After all, just one late payment can drop your FICO credit score by 50 points or more. Imagine the damage done by being three to six months late on multiple accounts.

Tags: Debt Settlement
Previous Post

How To Become A Super Saver

Next Post

I Debticate Myself To Being Debt Free Worksheet

Related Posts

household debt

Household Debt Reaches $16.51 trillion in Q3 2022

by Lynnette Khalfani-Cox, The Money Coach

The Federal Reserve Bank of New York's Center for Microeconomic Data today (November 15, 2022) issued its Quarterly Report on Household Debt and Credit . The Report shows an increase in total household debt in the third quarter of 2022, increasing by $351 billion (2.2%) to $16.51 trillion. Balances now stand $2.36 trillion higher...

Debt Snowball Vs. Debt Avalanche: Which is the Best Approach to Pay off Debt?

by Guest Blogger

Anyone who’s ever been in debt knows one thing: it doesn’t make life easy. In fact, debt can have many negative effects on one’s livelihood. For example, having large amounts of outstanding debt can negatively affect your ability to obtain any type of credit, such as a credit card or...

FDCPA

How To Deal With Out of State Debt Collectors

by Lynnette Khalfani-Cox, The Money Coach

Q: Hi, Can a debt collector that is based in and licensed in the state of Delaware, collect a debt from me in California? Also, I know California no longer requires California agencies to be licensed, however they have broken 3 possibly four of the FDCPA rules  and I would like to report them,...

debt collectors

5 Tips to Protect Your Paycheck from Wage Garnishment

by Lynnette Khalfani-Cox, The Money Coach

Do you have a lot of unpaid debts? If so, your creditors may threaten your paycheck with wage garnishment. Wage garnishment occurs when a court issues an order to withhold a percentage of your paycheck until your debts are paid off. For large debts, this can be financially devastating. Is...

get out of debt

The Pros and Cons of Paying Off Someone Else’s Debt

by Lynnette Khalfani-Cox, The Money Coach

Managing your personal finances wisely is one of the hallmarks of a responsible and mature person. Unfortunately, not everyone is able to or willing to handle their own financial affairs. Sometimes money problems occur as a result of circumstances; other times poor decisions play a role. Either way, it can be...

jail debtors prison

4 Crazy Times People Got Thrown In Jail Because of Their Debts

by Lynnette Khalfani-Cox, The Money Coach

Debtors prison was abolished in America well over a century ago. But that doesn’t mean you can’t get arrested or locked up for past-due debts. Here are four crazy instances in which authorities have hauled people off in handcuffs and taken them to jail in connection with having overdue bills....

debt detox

The 5-Step Debt Detox That Improves Your Finances and Health

by Lynnette Khalfani-Cox, The Money Coach

If you’ve resolved to improve your finances in 2016, now is a great time to do a debt detox. Many people are still in their holiday debt hangover, so the beginning of the year gives you a good opportunity, and a good reason, to get back on track financially. If...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1378 shares
    Share 551 Tweet 345
  • What to Do if Your Spouse Stole Money From You

    1167 shares
    Share 467 Tweet 292
  • What to Do If You Can’t Afford to Leave Your Spouse

    1104 shares
    Share 442 Tweet 276
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1011 shares
    Share 404 Tweet 253
  • What Do All Those Strange Codes In My Credit Report Mean?

    815 shares
    Share 326 Tweet 204
  • Do This Now If Your Wages Were Not Reported

    745 shares
    Share 298 Tweet 186
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    724 shares
    Share 290 Tweet 181

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist