Debt Relief Companies – Too Good to Be True?

telemarketer headHave you ever wondered if those TV ads and telemarketers who call you about debt relief are for real?

You know what we’re talking about…

The people who say they can reduce your credit card and other debt by 50% or more. They tell you that they’ll negotiate with the credit card companies, and make large chunks of your personal debt disappear.

The truth is – sometimes these companies can help, and sometimes they can’t. But now they’re going to have to be a bit more honest about the assistance they actually can provide.

New Federal Trade Commission rules for debt-settlement companies go into effect starting next week.

In the past, if you signed up with many of these companies, you wouldn’t be told about the fees that you’d incur while the organization was supposedly working to reduce your debt. Neither would you have any idea how long it would take to negotiate a settlement.

If it took two years to see any results – then your debt was only gaining interest and getting bigger over that time period.

With so many Americans looking for help with credit card debt and looking for ways to find financial freedom, the number of people turning to debt-relief companies for assistance has grown significantly.

A major organization in the industry called the Association of Settlement Companies estimates its various members have served 154,000 people as of June 2009 compared to 123,000 at the same time last year.

But complaints about debt-settlement companies have climbed as well. The FTC says complaints filed about abusive and deceptive practices jumped 18% between 2008 and 2009.

The new rules, which start Monday, require debt-settlement companies to give an initial estimate of how much money clients will need to pay off the new balance.  Such companies will also be required to give potential customers a time-frame for how long negotiations with the credit card company might take.

Some debt-settlement companies may tell customers to stop making monthly payments during negotiations. Now they must notify people about the damage a move like that could have on your credit score.

Basically – if there are any negative consequences – you now need to be told about them before you pay for any sort of service.

There are times when you might actually get some help from debt relief companies – but not always. According to the FTC, more than half (60%) of customers who sign up for help end up dropping out of the debt-settlement program before going through the entire process.

There really is no “magic bullet” to help you get out of debt.

Here’s the harsh reality: If we get ourselves into a mess- we are the ones that need to get ourselves out again!

If you want to start managing your debt you need to take control of your personal finances and act responsibly. One way to do that is to order personal checks and use them to manage your money along with the free check register you’ll get from Check Advantage.

One of the biggest steps to begin that journey to financial freedom is to change your habits. Personal checks can help you create a budget and realize how much you are spending.

If you feel uncomfortable using personal checks, and feel like you are used to the ease of using a credit card – that could be part of the problem. Checks help you realize exactly how much you’re spending, while plastic credit cards let you spend away without a second thought.

Learn more about using personal checks in a special section of our website called Check Education. Take a look at some of the short and simple articles in Personal Check Education to find out more about using checks in your everyday life.

Finally – here’s a goofy video making fun of all those debt relief companies, which all too often are too good to be true!

Image credits: Ray7775, svilen001

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