Saturday, July 17th, 2010
Has anyone had a good or bad experience with debt relief companies like credit relief today?
Scott B asked:
Credit Relief Today offering negotiated down debt relief resulting in what they say is at least 50% of your debt being erased. They said there is a 10% fee of original balance and your fico could drop significantly. They went on to say that if you owe more than 30% of your balances, that your fico will begin to drop anyway. Anybody have any educated experience with a relief program like this?
Credit Relief Today offering negotiated down debt relief resulting in what they say is at least 50% of your debt being erased. They said there is a 10% fee of original balance and your fico could drop significantly. They went on to say that if you owe more than 30% of your balances, that your fico will begin to drop anyway. Anybody have any educated experience with a relief program like this?
July 19th, 2010 at 2:03 am
The problem with most debt relief companies is that there are up front fees and back end fees. As you are aware, they charge 10% up front. The problem is that they usually have no arrangements in place with your creditors, so they rely on you defaulting on your credit cards. They tell you not to pay your creditors anything, ignore the calls and letters. What typically happens is that the creditor usually charges the account off after 6 months, and either puts you through collections themselves or they sell the account to a debt buyer for pennies on the dollar. Then the debt buyer puts the account in collections.
When you settle an account, if you save more than $600, the creditor send you a 1099-c for unearned income. You end up paying taxes on the money you saved.
You also end up paying them another 10% of the money saved as a fee.
Also, your credit score drops a minimum 45 points for each settlement.
It’s a three way loss.
1 – You end up paying someone a lot of money.
2 – Your credit score takes a major hit/hits.
3 – You have to pay the government.