Why So Much Conflicting Information About Debt Settlement Programs?

       Depending on which article you read, Debt Settlement programs are either hailed or cursed. It is no secret that in recent years Debt Settlement programs have flourished, as dropout rates for Debt Management programs have increased. Lets take a moment to explore why views of debt settlement programs can be either vitriolic or praised by others.

       Imagine you are a credit card bank and making huge profits charging 29 to 35% interest along with nuisance fees like overlimit charges, late fees, and unrequested default insurance with as many holes as Swiss Cheese. Everytime someone charges , lets say, $5000. in revolving credit, and pays only minimum payments, you are reasonably assured of getting back five times what you disbursed in unsecured credit in a relatively short period of time. Armed with the knowledge and ability to predict default rates from FICO scores your business is booming. Couple this, with the fact that a number of years ago, as an industry, you had the brilliant idea of being able to rehabilitate credit users who got into trouble paying after you squeezed the last usurious dollar from them, by enrolling them into a Debt Management Program, which you created, to help loosen ever so slightly, the very noose you tightened.

        So for years, you, the banks are king of the hill. Suddenly, as americans use more and more credit because they are either living above their means, or have suffered a financial setback out of there control, default rates begin to increase. All of the non-profit debt management companies, completely controlled by you, and which are paid a handsome collection fee by you, are having unacceptable default rates, and not collecting as much money. Right about this time, the debt settlement industry wakes up and sees a huge opportunity. Bankruptcy laws tightened, largely at the behest of the banking industry, default rates increasing, consumers desperately  looking for help, all add up to what we have today as a very sophisticated Debt Settlement industry. Here, clients can hire legal counsel to represent them and do the settlement negotiations for them. Usually, creditors stop calling and for half the monthly payments that were going to the banks, the hard pressed debtor now has a way out. While the debtor would have to bite the bullet for a few years, in terms of a less than stellar credit report, there was a light at the end of the tunnel, called debt freedom.

    Is it at all surprising that the banks, non-profits and our state and federal regulators who allowed these usurious conditions to exist, are not fond of debt settlement companies? What about collection agencies? What might there take be on debt settlement companies. We already know that they like the idea of debt settlement. Why? Because they buy these charged off accounts from the banks for sometimes pennies on the dollar, and then, in a settlement, make there money back maybe ten times.
So, collection companies like settlement companies which have accumulated enough money to settle there clients accounts, but are not crazy about these companies, which charge a fee, but are not ready to settle, but also run interference for there clients until they are ready.

     This is the plain truth. Do not be bamboozled by some of the blustery  tones taken these days regarding settlement programs and settlement companies. Liking or disliking debt settlement programs is all a factor of which side of the fence you are sitting on. And, which side of the fence you are sitting on, does not change the fact that these programs do work and for many, are the only way out.

     If you would like to learn more about debt relief solutions and options, please subscribe to the newsletter feed from this blog, by visiting: http://freecreditcounselingblog.typepad.com/creditcounseling/ and leaving your email address. Your information is never shared, and if you subscribe, you will receive a free budgeting program to help you manage your money and remain debt free.

Written By:
Steven Ciantro
Nifce Certified Credit Counselor
www.Americandebtenders.com
Help@americandebtenders.com
877-766-2465

This article may be reproduced in its entirety providing the signature line and this permission line are included.