Have payday loans, in the military or bank with credit unions? Debt relief companies will be either limited or will not work with you at all.
You can hear the commercials on the radio and see their advertisements on television and the web. Save money by paying off your debt through a debt relief program. It sounds amazing. As we all know, that services like these have pros and cons, it is good to know both sides before you sign up for one of their programs.
Here are the promises:
- Lower your monthly payments
- Settle your debt for a fraction of what you owe
- Be out of debt in as little as 12 months
- Raise your credit score
Sounds fabulous! Debt worries will be gone without high interest loans like online payday loans. Who doesn’t want smaller payments which will work towards getting rid of debt? Who doesn’t want to be out of debt in as little as a year? All this and have my credit go up too? These are great hooks to get the financially vulnerable wanting in on the program.
Payday loans have attractive hooks to for those who are looking for fast cash.
These advertising hooks will lure potential customers into the application process. It is exciting to think your problems can be solved so easily! A responsible payday loan lender will not promise to solve your debt problems, the low cost payday loan is not set-up to take care of debt but to help with emergency payments. Debt relief programs will settle debt. Unfortunately, this is not allowed in many states similar to direct payday loans. If you do live in a state in which they can do business, who your creditors are will be the next qualifying hurdle. There are many credit unions and military credit companies which will not settle unless through one of their programs. If you have secured debt, you will not want to settle that amount unless you are planning on forfeiting the property used as collateral.
Let’s look at some of the bad sides to enrolling in a debt settlement program.
- Any credit card entered into the program will be closed.
- Your debt will show “settled” on a credit report.
- There are no promises how long it will take to complete the program. Variables affecting the program are: your ability to make payments each month, if you can pay more towards the program it might get done faster and how quickly the creditors will accept a settlement for the debt owed. Another uncontrollable variable is what percentage the creditor will settle for. No debt relief program can promise any numbers promising you a certain amount of savings.
- There will be no payments towards your creditors until they settle, so your credit score will crash.
- If you are still building debt during this process, your credit will stay on the lower end.
- If you need to get a new car, find a new apartment or plan on buying a home in the next 5 or 6 years, this program may keep you from doing so successfully.
No matter what financial solution you are looking to use, it all boils down to the same mix; shop around to see all your options and check out many of the companies which will provide the services. As with online payday loans, you will want to research debt relief or debt settlement programs before you sign on the dotted line.
