There are a number of debt settlement companies that received complaints from their former clients claiming that they had to pay more than the original amount of debt.
If you pay attention on the details, the media have only covered stories from a small group of unsatisfied customers that have tarnished the companies' credibility to help their clients to pay off their massive debt.
Therefore, there are only a few "black sheep" companies that misinterpret their services and lured many desperate debtors - claiming that these companies can bring down the total amount of the outstanding balances by representing their clients to settle debt with the creditors.
Many new and existing clients are concerned about few main issues: Most people are worried about the upfront fees charged by these companies - that's the choke-point of relying on someone else to settle debt on your behalf.
The duration of the settlement process - how long does it take to have your debt settled? It's an advantage that you can pay off your debt as fast as possible.
The success rate of the settlement process with the creditors - regardless how they pitch their good services, one thing that matters is whether these companies are able to benefit their clients by settling their debt at lowest possible rates.
According to the new rule that is implemented by the Federal Trade Commission (FTC), debt settlement companies are only allowed to collect fees when they have successfully complete the settlement with the creditors.
These companies have to report to the FTC about the total cost of each and every settlement as well as the total upfront and service fees.
In other words, these companies have to avoid any possible faux pas of their services in order to survive in this industry.
Previously, not all companies had successful settlement with all the creditors - most clients have multiple debts resulted from different creditors and it's very difficult for the clients to negotiate with every creditor in-person.
With this new rule, debt settlement companies are extremely "pressured" by the FTC, to improve the successful settlement with the creditors.
On top of that, the clients would likely have their credit card debt settled at lowest possible rate.
Optimistically, it is possible for debtors who have massive debt - total of $10,000 of credit card debt, by reducing the total outstanding debt - i.
e.
more than 20% of debt reduction rate.
It is still early to see whether these debt settlement companies can really settle your credit card debt fast and effectively.
Don't be influenced by the fast-debt-elimination hype, actual elimination of massive debt requires consistency and perseverance.