Debt Settlement and How Much it Will Cost You

For many consumers, seeking out the most appropriate debt relief option relies heavily on how much they can afford to pay. For most consumers who face outstanding debt amounts, they already struggle to make their minimum payments to their creditors, if they are able to make their payments at all. The last thing they are looking for is a debt settlement option that costs nearly the same as what their monthly minimums would cost them. Unfortunately, many debt settlement companies in the industry distribute best case scenarios to all of their potential clients and base their costs off of these assumptions. Here is what I mean: these companies assume that they can settle with each creditor you owe for only 35% of the total debt amount. This is not ethical from a business standpoint and in no way does it portray the reality of the situation most consumers are facing. Rarely can a debt settlement company reach agreements with all of your creditors for this low. In fact, there are creditors out there, for example Citibank, who typically refuse to settle for anything less than 60-70% of your total debt amount. That’s what these companies are not telling you. The goal of FDR’s debt settlement program is to keep you completely informed as to the financial situation you are facing and how much, realistically, the program will cost you once your circumstances are closely analyzed.

It is certainly important for any consumer who is considering debt relief to do their research and contact a number of companies before making a final decision as to which company is the best fit for them. A word to the wise: the cheapest company is probably not the best. As previously mentioned, they are most likely giving you a price according to best possible settlement estimates without taking into account the internal policies of each creditor you owe. Without a sound understanding of the intricate policies of each creditor, it is virtually impossible to generate a firm, realistic estimate of the potential monthly payment, how much the program will cost in total, and essentially how much money you will save once you have graduated from such a program.

Another factor that determines how much money a debt settlement program will cost is the time the company estimates that the consumer will remain in the program. Once again, stray from settlement companies who make claims such as “become debt free in less than a year!” as these companies are not being honest with you. As a result, they will base your estimate cost from a 12 month program, when efficient debt settlement programs realistically last 2.5-3 years. In the end, your cost at the beginning of the program will appear to be surprisingly low, and this is no surprise. The consequences of believing such claims could lead to 1) a situation where you end up paying far more than what you expected as the program continues past the one year mark and 2) a situation in which the company tells you at the one year mark that they have failed to settle all of your accounts and you need to cough up more money for further negotiations. Unfortunately, many consumers who are facing outstanding debt amounts can’t afford to do this, and are forced to drop out of these programs without saving a single penny all the while remaining in debt to their creditors. The most important thing one can do when assessing the potential cost of a debt settlement company is to seek out employees who are giving honest, realistic estimates of what you will have to pay. Know your creditors, know how much you can afford, and know your financial situation from back to front so you can become familiar with a realistic cost of a settlement program before enrolling.