How Much Does It Cost To Settle Your Debt
Debt settlement can be a mechanism that allows you to settle your debt for less than you owe. On the surface, this seems like a great way to finally get rid of the crushing debt you are trying to deal with. However, settling your debt is usually not going to come cheap. If you choose to go with a third party service, prepare to pay almost as much in fees as you do to settle your balance.
Enrollment Fees
Some companies will require that you pay a fee in order to enroll in a program. This type of fee might also be referred to as a retainer fee. Whatever it is called, this fee is paid upfront regardless of your debt situation. It is important that your exercise caution if a debt relief company charges any upfront fees.
Maintenance Fees
Watch out for any company that decides to charge a fee to maintain your account. You will pay more in maintenance fees the longer that your account is open. This is one way in which debt relief companies take your money without having to guarantee any type of results. Maintenance fees can be as high as $25 a month or more.
Percentage Of Your Savings
Another popular fee that debt relief companies charge is based on the amount you save as a result of a debt settlement. You could end up being charged as much as 30 percent of the portion of the balance that is forgiven. This fee could cost you hundreds of dollars depending on how much of your balance is settled. Try to stay away from a company that charges such a high settlement fee as it can significantly negate any relief you get from creditors.
Consider Going On Your Own
There is nothing a debt relief service can do that you cannot do. Talking to your creditors directly can get you the same results without having to pay for the service. Going on your own is another option to consider when you are thinking about settling with your creditors.
Settling your debt can save your thousands of dollars. However, you should be aware that the fees charged by debt relief services can cut into your savings. Make sure that you are taking those fees into account before deciding to go with a third party service. You want to make sure that you are actually saving money.
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