Most Common Secret Debt Settlement Service Fees

Most Common Secret Debt Settlement Service Fees

When you go through a do-it-yourself debt settlement, you are in control of all expenses related to the process. If, however you choose to go through a company, many of them will impose a multitude of fees hidden inside their payment system. These fees are one of the main reasons why debt settlement as a service has gained it’s bad reputation over the years.

Percentage Fee

Debt settlement services charge their percentage fees in two main ways. The percentage fee is the better way for consumers, because it’s calculated as a percentage of the debt which the company saves you. This way you’d pay more if the settlement company did a better job.

The second way is not as fair. This time the percentage fee is based on the total amount of debt you need to settle. This means that people with smaller debts pay less regardless of the performance of the debt settlement company for each specific client.

Other common fees include the sign-up fee and the monthly maintenance fees.

Upfront fees

In order to settle your debts, you need to save enough money to pay the lump settlement sum. The problem with this is that some companies will charge their fees before making the settlement. This means that the first $ 1000 or more could be going for the fees, which delays the settlement with several months. The delay is the smaller evil, what if the settlement never happens and you’ve paid all those fees in advance?

Other debt settlement companies structure their payments in a fairer way. They will only charge their fees after the settlement has been arranged and would base these fees on the actual amount you saved by using their service.

This will allow you to settle debt much quicker.

Are the Fees Refundable?

Usually, when you cancel a debt settlement contract you should get all the money you saved toward the settlement back. However, any fees you’ve paid are often non-refundable. That means that if you signed up for a service which takes their fees upfront, you won’t get anything back if you cancel while you are still paying their fees. The company will just get paid without doing any work on your account!

Undisclosed Fees

Figuring out how much a debt settlement service will cost you is sometimes difficult. When a company is not being upfront about their fees and the only way to get the full picture is to know what the right questions to ask are, then it’s best to choose another settlement company. Look for straight-forward fee structures which you can understand without clarification.

Laws for Debt Settlement Fees

The latest law which the Federal Government passed regarding debt settlement companies requires them to fully disclose any and all fees before signing up clients. Also, fees can only be charged after a successful settlement and should be based on the amount of debt saved. The problem is that these requirements are only valid for debt settlement companies which approach prospects by phone. If a settlement company gives face-to-face presentations, these laws do not apply to them.

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