FINALLY a Consumer Stimulus
• Restructure and substantially reduce your total debt balance
• Refinance your debt at the reduced amounts
• Restore, improve, repair and increase your credit scores
• Restructure and substantially reduce your total debt balance
• Refinance your debt at the reduced amounts
• Restore, improve, repair and increase your credit scores
What is Debt settlement?
Debt settlement is a process where a consumer seeks to negotiate a resolution of money owed, usually on a credit card or other unsecured loans. Over the years, firms have begun to use terms like debt arbitration, debt negotiation, credit settlement and debt relief, but these firms still operate in the same fashion.
How Debt Settlement Works
When you enroll with a Debt settlement company, they will ask you to immediately stop making payments on your credit card accounts or other unsecured debts that you might have. They will also ask you to not have any contact or conversations with your creditors. They do this because they want to ensure that your account is eventually charged off by the credit card issuer and sold to a collection agency. This makes negotiations and their job easier. Next, instead of paying your credit card and unsecured debt, they will ask you to make monthly payments (typically a more affordable amount than the amount required by your credit cards and unsecured debt) into a trust or escrow account. The monthly payment does not go to your creditors, but instead is accumulated in the trust or escrow account for many months (in some cases more than a year), until you have accumulated approximately 50% of the balance of one of your debt accounts. Your debt settlement company would then use the accumulated cash to negotiate a settlement on one of your accounts for approximately 50% of the account balance and will pay the negotiated amount with the cash accumulated in the trust or escrow account. This process is repeated for as many credit cards or debts that you have enrolled in the program. Typically, the entire program will take 24 to 48 months to complete.
The Negative Side
· The time frame without paying on your accounts will further impact your credit score, which may hinder your ability to get basic forms of credit and employment.
· The drop-out rate of debt settlement programs is high because these programs can last as long as 60 months and consumers lose patients.
· Consumers can be sued by their creditors for principal and interest on accounts.
Some Criticism
In May 2009, the New York Attorney General issued subpoenas to fourteen "debt settlement" companies, looking for violations of New York law. On May 19, 2009, the New York Attorney General filed suit against two "debt settlement" firms and their affiliates, alleging violations related to fraudulent business practices and false advertising.
A March 2010 CBS "Early Show" story on the debt settlement industry cast a harsh light on major debt settlement firm Credit Solutions of America's business practices, and provided consumer advice for debt settlement counseling.
Summary
This industry is under fire by congressional leaders around the country. It has developed a reputation of exploiting the American consumer. RRL Finance seeks to bring legitimacy and sustainable results to consumers.
