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Why working with a debt settlement company is risky

On Behalf of | Jul 5, 2023 | credit card debt |

Many people living in Maryland feel uneasy due to mounting debt, and if you include yourself among them, you may be looking for a way to help dig yourself out and get back on your feet. Be wary, though, of signing on to work with a debt settlement company, because sometimes, these businesses promise more than they provide.

Per the Consumer Financial Protection Bureau, a debt settlement company is a business that tells you it is going to save you money by helping you pay off your debts more quickly and for less money than you might be able to otherwise. However, there are numerous risks involved with partnering with a debt settlement company. Here are just a few.

False guarantees

Despite what a debt settlement agency may tell you, these businesses should not “guarantee” that they are going to get rid of your debts for a certain amount. Yet, many of them tell consumers they do have this ability, even though creditors have no obligation to abide by a debt settlement company’s proposed terms.

Bad advice

It is also common for debt settlement companies to tell consumers to stop paying their credit card bills, but this, too, is ill-advised. Debt settlement agencies may not explain the risks involved in doing so, which include, among others, your credit score taking a serious hit.

Upfront fees

Many debt settlement agencies also charge steep upfront fees without being able to make any promises about how long or how much money it might take to get rid of your debts.

Because you may find yourself even deeper in debt after working with a debt settlement agency than you were beforehand, you may want to consider alternative methods of getting rid of debt.

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