Start Fixing your credit today!!!  The only thing you legally need to supply the credit bureaus for a copy of your report is your name, your social security number and a legal mailing address (P.O. Box is a legal address). If you don't want to chance harassment by creditors at this time, it may benefit you to acquire a P.O. Box. Did you know that many of the collection agencies are owned by the credit bureaus?

Shocking Facts - What Debt Settlement Companies Don't Tell You
Author: Denise Hall
If you're thinking about using a debt consolidation or debt
settlement service to help you get out of debt faster and
save money on your monthly payments, make sure you do your
homework before choosing a company. There are definitely
shams and scams out there.

First let me say that debt consolidation is *not* the same
as debt settlement/negotiation, which most people don't
realize.

Debt settlement companies charge hundreds of dollars as an
initial "admin fee" to set up your account, plus a monthly
service fee. The fees vary depending on the company and the
amount of your debts.

Such companies take your money every month, but don't make
monthly payments to your creditors! Instead, they put it in
a trust account, negotiate your debts with your creditors,
then make a lump-sum payment when there's enough in your
account to pay a creditor in full.

That can take *years* depending on the amount of debt you
have with each creditor. Meanwhile, you can be sued by your
creditors and your wages can be garnished! (Or just don't
make payments to your creditors. You'll end up in the same
spot without paying someone to help you get there!)

Settlement companies don't ask your creditors to stop all
interest, late fees and overlimit fees from accruing. That
means while the negotiations are ongoing, your bills will
continue to grow! So if you're sued and a judgement is
brought against you, you'll owe more money than before!

And shoddy companies, which there are alot of, don't tell
you *any* of this up front. I call it "getting permission
by ommission" because they simply don't tell you how their
program works *before* you sign an agreement with them. Or
after, for that matter. But if you ask the right questions,
eventually you'll figure it out. (Or when the crap hits the
fan. Whichever comes first.)

Let me give you an example of how debt settlement works.

Let's say you have $20,000 in unsecured credit card debt.
You owe $10,000 to one credit card company, $6,000 to
another and $4,000 to a third. You agree to a 5 year plan
where you pay $250 a month to the settlement company.
(After all, $250 a month for 60 months is only $15,000, so
you're saving $5,000 and you'll be debt-free in 5 years,
right?)

The admin fee will cost you $750. Your first 3 monthly
payments go towards that and nothing gets put into your
trust account until your 4th month.

The settlement company keeps $50 of your $250 payment each
month for the service fee. That means $200 a month is being
added to your trust account.

Most debt settlement companies claim to be able to
negotiate your debt for about 50% of what you owe. So let's
use the lowest credit card debt as an example.

If you owe $4,000 and your creditor agrees to accept $2,000
as payment in full, it will take 10 months at $200 per
month to have enough in your trust account to pay off just
that one credit card.

But remember, your first 3 payments to the settlement
company only paid the admin fee. That means your first
credit card settlement is 14 months *after* you started
sending them money.

So what's the problem? It's simple. Your creditor won't
agree to accept half of your actual debt unless, or until,
it can be paid in full. Otherwise, you're expected to make
your normal monthly payments.

Since you don't have $2,000 in your trust account, and you
won't have it until more than a year after you stopped
paying your creditor directly, they'll probably take you to
court and request that your wages be garnished long before
you have that $2,000 built up.

And what about your other creditors? Well, they'll be
waiting even longer to get their money from the settlement
company. The $6,000 debt will take 15 *more* months to pay
off, assuming your creditor waits that long and agrees to
50%. And that $10,000 bill? You do the math.

On the other hand, if you signed up for a 3 year plan with
the settlement company, your debts would be paid off
sooner. But, the question is, will your creditors wait that
long? Probably not.

The facts are, you can negotiate with your creditors
yourself. Most will agree to take a smaller monthly payment
from you and stop all interest and fees from accruing. And,
of course, you'll save thousands of dollars in fees to a
settlement company.

Before signing up for any service, please be sure you check
out the company thoroughly. And don't let the words
"non-profit" fool you either. Alot of debt settlement
companies claim to be non-profit.

Going back to the example above, if you pay them $15,000
over a 5 year time frame and they settle your debts at half
of what you owed, they'll make $5,000 from you. I'd call
that a profit, especially since they might not have
actually helped you in any way.

Most companies will allow you to cancel your account and
get a refund of what you've paid, less the non-refundable
admin fee and the monthly service fees. If you feel you've
been mislead about their program, don't hesitate to argue
til the cows come home. File a complaint with the Better
Business Bureau or hire an attorney if you feel you're
getting nowhere.

You can visit the Better Business Bureau's website
(http://www.bbb.org) and find reports on hundreds of
companies. Here's a small listing of companies that have
poor reputations with the BBB:

National Consumer Debt Council LLC - Irvine, CA (A.K.A.
NCDC, United Consumer Law Group)

Financial Rescue Services - Burbank, CA

Debt Legal Services - Anaheim, CA

American Debt Relief - Los Angeles, CA (A.K.A. A M Debt,
American Debts Relief, Debt Relief)

Please be very cautious when choosing a debt help company
and ask lots of questions before agreeing to anything. If
you find they're evading your questions, run fast and run
far. There are reputable companies out there, so keep
looking until you find one.

About the Author

Best Online Credit Repair Resources

Featured Credit Repair eBooks: