What do you think of when you think about debt relief programs? There is clearly one positive in signing up for one: a lower, single monthly payment. Following that logic, you can even end up paying for a less than the amount you initially owned.
That sounds like a good deal. It can be for the right people. However, it is not a one-size-fits-all solution, and it is definitely not for everyone. Here are top three reasons why going for a debt relief program can do more harm than good.
It Will Compromise Your Credit
Once you sign up for a debt relief program, the debt settlement firm will advise you to stop making payments on your debts. That is going to end up worrying the creditors. By the time the debt settlement firm shows up to the scene, your creditors will be much more willing to cooperate with the debt relief company. While that seems like a good idea, it is actually not. The lenders will keep reporting your late payments to the credit bureau. That is going to ruin your credit score.
It Stays on Your Record
A poor credit score can affect many things, including your insurance rates. You will get higher rates for your auto insurance, which is bad news for you. That could mean a difference of thousands. If you pay less than what you owe, that is going to stay on your credit report history for as long as seven years.
It Has Hidden Fees
When you sign up for a debt relief program, ask about payment. Some companies take a percentage of your total debt for their fee. If that percentage is about eighteen to twenty percent of your total debt, then it is going to be a lot. Some companies also require loan insurance. All in all, the hidden fees can take a chunk out of your budget. If you are not careful, you could end up in more financial trouble.
Getting Help
The best way to get help is to look for a bankruptcy attorney in Phoenix, AZ. A seasoned legal adviser can provide you with better suggestions, tell you what you need to do to get the outcome you want, and explain the likely consequences and scenarios should you go with one of the options available to you. With the help of a debt relief attorney in Phoenix, AZ from the Law Office of Larry Karandreas, you can get your finances and your life back under control.