If you plan on signing up with a debt settlement company anytime soon, you may find yourself in more hot water, than when you started in the first place.  Some debt settlement companies can be good for you, while others can do more harm than good.

What is a debt settlement company?

If you’re unfamiliar with a debt settlement company, they are basically a company that works on settling debts for you.  They do all the dirty work with the credit card companies, and consolidate all of your bills into one.

Let’s say that you owe $10,000 on one credit card, they would work with the credit card companies, and say, get that $10,000 balance to a $5,000 balance.   Some companies are good with that, while others aren’t.  This is why it’s important that you do your homework with these companies before you sign the dotted line.

Now, here’s what the debt settlement companies don’t tell you:

There’s fees galore: Every company has to stay in business, so they are going to charge fees for you.  Let’s say that you’re going to get 50% knocked off your credit card bills.  On top of that 50%, you’re going to have to pay an admin fee.  This fee can range anywhere from $100 to as much as $1,000.

May take more years: It may seem like these companies are doing good for you, but you soon find out that they are just doing more harm than good.  They can say that they cut your bills in half, but in the long run, you’ll have to pay a higher interest rate to them, as well as an administration fee.  In the long haul, you would have been better doing this all yourself.

Hard to keep track: The companies may be telling you that they are doing their job, but what you find out is that you’ll have a harder time keeping track of your statements.  They may say that they negotiated 50%, but they really haven’t, and instead are charging you fees, etc.  This can lead to a lawsuit, and more.

In the end, it’s up to you if you want to choose a debt settlement company.  Some are great, while others are bad.  If you want to find a great company, make sure that you check with the BBB, as well as get references.  This is the only way you’ll get a great company in your favor.