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| Disadvantages of Debt Settlement - Creditor Calls | ||||||||||||||||
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Another commonly referenced disadvantage of debt settlement is
the potential for increased debt collection activity. For consumers
who are current on their payments or ones that lack the stomach for
collection calls, this is another downside that should be carefully
considered prior to enrollment in a debt settlement program. For
those of us who have already fallen behind or where defaulting on
payments is imminent, this fact might be of minimal concern since
collection activity has already increased or is inevitable. Moreover, although no debt settlement company can cause collection calls to stop, particularly those made by the original creditor, there are steps that can be taken to reduce them. One popular method is changing your phone number and address to your settlement company’s phone number and address, so all collection calls are automatically routed to them instead of you. Furthermore, there are state and federal laws that specifically target overly aggressive collection activity. Through the help of your debt negotiation company, you can educate yourself about the Fair Debt Collection Practices Act (FDCPA), which prohibits excessive harassment by debt collectors (not the original creditor, however). Many settlement companies promote the use of Cease and Desist letters as a way to stop creditor harassment. In accordance with the provisions of the FDCPA, collectors are legally obligated to stop contacting a consumer when they receive a Cease and Desist letter. Although this tactic is typically successful at stopping collection calls (we say “typically” because many collectors ignore Cease and Desist letters or claim they never received them), it is a dangerous technique because it can trigger escalated collector efforts by sending the debt to a law firm. In the end, consumers must understand that although debt settlement companies can take steps to reduce creditor harassment, collection calls are still inevitable throughout the program. Ultimately, it is the duty of the consumer to weigh the financial gains of debt settlement against the nuisance of dealing with creditor calls. For many overextended consumers, using caller ID is a small sacrifice to be debt free without bankruptcy. Follow this link to discover some other downsides of debt settlement. |
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