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Debt settlement is a risky way to seek debt relief

by | Mar 16, 2020 | Firm News

When Michigan residents find themselves struggling to pay their debts, they may explore many options. Perhaps one of the riskiest paths they can take is dealing with a debt settlement company. While there may be some of these companies that are trustworthy, it is often difficult for a consumer to tell which ones may leave them in worse financial shape instead of providing the debt relief they were seeking.

A borrower who has late payments or is already in collections for some debts may wish to negotiate with creditors for a lower balance. This is seldom an easy task, but debt settlement companies often make big promises to desperate borrowers. The process includes the borrower sending money each month to the settlement company instead of paying the debts. The settlement company then takes the money it has collected and begins negotiations with the creditors.

This process may take years, and the penalties, fees and interest continue to accrue on the unpaid debt. What is most concerning is that after all that time passes, the creditors may refuse to negotiate, leaving the borrower in a devastatingly bad situation. Even if the negotiations are successful, the settlement agency is likely to charge a high percentage of the negotiated settlement.

When seeking debt relief, it is wise to avoid any route that seems like a quick fix or promises unreasonable results. Instead, reaching out for reliable advice from a legal professional may offer a Michigan resident a more solid path to follow. A compassionate and experienced attorney can guide one through the most appropriate options for finding a way out from under the burden of debt.