Debt Settlement Programs - How can they help?

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Debt Settlement Programs - How can they help?

Posted On : Nov-09-2011 | seen (320) times | Article Word Count : 587 |

Debt counseling may be advantageous to people who are not in danger of having to file for bankruptcy or have collections agencies making multiple calls to them every day. In these cases, settling credit card debt may be what these people need even more than developing a budget.

People in debt are looking for someone who can help them extricate themselves from it, not someone who will take advantage of them and cause them to be even more debt-ridden. They may also be looking for a way to avoid filing for bankruptcy but after they have entered into negotiations with some debt relief companies, the end result is that they had to file for bankruptcy anyway. The Federal Trade Commission (FTC) has written legislation that was meant to help protect consumers in debt from these companies whose only purpose is to extract the last pennies these people have from their pockets.

Making False Claims

The legislation actually went into effect on October 27 of last year, but not everyone is aware of what it is about. One part of it concerns advertising. Ad campaigns may deceive people in debt and to combat this, the FTC has prohibited debt relief companies from making false claims in their ads. For example, they cannot promise that they will definitely be able to reduce anyone’s debt by 50 percent.

Up-Front Fees

They must also not charge their clients before they have begun negotiating with the clients’ creditors. The specific times when they can begin to charge these clients are:

1. After the company has successfully negotiated changes to at least one debt
2. There has been an agreement between both debtor and creditor for new terms related to the debt
3. Debt relief negotiations have led the debtor to make a first payment to the creditor

How Debt Relief Companies May Charge Fees

When charging their fees, debt relief companies must charge them in one of two ways. They can either charge a flat fee or they can charge a percentage of the amount by which the debt has been reduced. If they charge a flat fee, it must be the same amount charged on every debt. Similarly, when the companies charge a percentage, they must charge each individual debt in the same proportion as all the other debts.

People who are aware of the FTC rules outlined above can keep themselves from falling deeper into debt because someone has taken advantage of their ignorance. Now they can concentrate on the debt settlement programs that may be right for them, and there are several options for them to consider.

Counseling Services

Debt counseling is an option that will help people change how they approach their finances, and it is a good choice for people who have difficulties setting up a budget and remaining on it. With debt counseling, people also receive education that is aimed at helping them stay out of debt in the future.

Debt Settlement

Debt counseling may be advantageous to people who are not in danger of having to file for bankruptcy or have collections agencies making multiple calls to them every day. In these cases, settling credit card debt may be what these people need even more than developing a budget.

Settling credit card debt requires that a debt settlement company take over the negotiations for their clients with their clients’ creditors. The debt settlement company will work with each creditor one at a time to reduce each balance to a more manageable amount. As they try to reduce the balances, they also will try to reduce the interest rates that will keep the balances from increasing at as rapid a rate.

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<h1>Debt Settlement Programs - How can they help?</h1> Author: <a href='http://www.articleseen.com/profile_Margarette Jones.aspx'>Margarette Jones</a> People in debt are looking for someone who can help them extricate themselves from it, not someone who will take advantage of them and cause them to be even more debt-ridden. They may also be looking for a way to avoid filing for bankruptcy but after they have entered into negotiations with some debt relief companies, the end result is that they had to file for bankruptcy anyway. The Federal Trade Commission (FTC) has written legislation that was meant to help protect consumers in debt from these companies whose only purpose is to extract the last pennies these people have from their pockets.

Making False Claims

The legislation actually went into effect on October 27 of last year, but not everyone is aware of what it is about. One part of it concerns advertising. Ad campaigns may deceive people in debt and to combat this, the FTC has prohibited debt relief companies from making false claims in their ads. For example, they cannot promise that they will definitely be able to reduce anyone’s debt by 50 percent.

Up-Front Fees

They must also not charge their clients before they have begun negotiating with the clients’ creditors. The specific times when they can begin to charge these clients are:

1. After the company has successfully negotiated changes to at least one debt
2. There has been an agreement between both debtor and creditor for new terms related to the debt
3. Debt relief negotiations have led the debtor to make a first payment to the creditor

How Debt Relief Companies May Charge Fees

When charging their fees, debt relief companies must charge them in one of two ways. They can either charge a flat fee or they can charge a percentage of the amount by which the debt has been reduced. If they charge a flat fee, it must be the same amount charged on every debt. Similarly, when the companies charge a percentage, they must charge each individual debt in the same proportion as all the other debts.

People who are aware of the FTC rules outlined above can keep themselves from falling deeper into debt because someone has taken advantage of their ignorance. Now they can concentrate on the debt settlement programs that may be right for them, and there are several options for them to consider.

Counseling Services

Debt counseling is an option that will help people change how they approach their finances, and it is a good choice for people who have difficulties setting up a budget and remaining on it. With debt counseling, people also receive education that is aimed at helping them stay out of debt in the future.

Debt Settlement

Settling credit card debt requires that a debt settlement company take over the negotiations for their clients with their clients’ creditors. The debt settlement company will work with each creditor one at a time to reduce each balance to a more manageable amount. As they try to reduce the balances, they also will try to reduce the interest rates that will keep the balances from increasing at as rapid a rate. 
About the Author: <a rel="nofollow" href="http://www.franklindebtrelief.com/credit-card-debt-settlement.html">Settling credit card debt</a> with debt settlement programs may be the best option some people have for improving their financial situations. . For more details just visit our <a rel="nofollow" href="http://www.franklindebtrelief.com/credit-counseling-resources.html">debt counseling</a> website. Article Source: <a href='http://www.articleseen.com/Article_Debt-Settlement-Programs-How-can-they-help_102132.aspx'> http://www.articleseen.com/Article_Debt Settlement Programs - How can they help?_102132.aspx</a>

Article Source : http://www.articleseen.com/Article_Debt Settlement Programs - How can they help?_102132.aspx

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Settling credit card debt with debt settlement programs may be the best option some people have for improving their financial situations. . For more details just visit our debt counseling website.

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