After acquiring debt, you may feel overwhelmed at the prospect of paying it all off. You may have received advertisements from debt settlement companies that promise to settle your debt for fractions on the dollar. Just thinking about the peace of mind of not having creditors call you on a daily basis may make you reach for the phone. However, before you make that call, it is important that you understand the potential risks of working with a debt settlement company.

Benefits of Working with a Debt Settlement Company
Debt settlement companies can sometimes negotiate your debt down so that debt collection companies accept less than the original amount you owed. Additionally, they can handle communications with debt collectors so that you do not have to deal with the stress and frustration of doing so.

In other situations, a debt settlement company may be able to help you consolidate your debt and make a more manageable monthly payment. It may actually be in your best interest to work with a debt settlement company. However, it is important that you talk through this option with a knowledgeable Peoria bankruptcy lawyer before entering into a contract with the debt settlement company so that you are made aware of the full extent of the services and informed of all charges and risks associated with this arrangement.

Drawbacks of Working with a Debt Settlement Company
There are three primary drawbacks of working with a debt settlement company:

You Will Have to Pay Additional Charges
Debt settlement companies do not work out of the goodness of their hearts; they are in it to make money. In addition to any debt payments you make, you will also need to make a payment to the debt settlement company. Protect your interests by having your Peoria bankruptcy lawyer review any contract before signing it so that you are informed of all associated costs.

Your Credit May Suffer
By not paying off the full amount of your debt or by closing your accounts, you may wind up hurting your credit. While bankruptcy may also impact your credit, whether the effect of the bankruptcy or the debt settlement is greater will depend on your personal situation.

You May Wind Up Paying on Invalid Debts
The debt collection business is often fraught with disorganization and confusion. Debt collection companies may purchase debts with no guarantee that they are valid. They may be so old that the statute of limitations has run on them. Debt collectors may not have a clear chain of ownership of the debt so if they did sue you, a valid defense could prevent collection on the debt. In some situations, the same debt may be sold to multiple companies so paying it off may not necessarily prevent you from later being pursued for payment from another debt collection company.
A knowledgeable Peoria bankruptcy lawyer will have the multifaceted understanding of debt collection practices and the legal defenses that you may be able to raise to minimize the amount of debt you have to pay off.

Charles Covey
https://peoriabankruptcylaw.com/