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Friday, March 25, 2011

Debt Settlement Scams

In the time of recession, a large number of Americans who are in debt, looking to eliminate their debt as quickly as possible. And as a result most of them are looking to get debt settlement services.

The debt settlement programs were actually started to help those people who had very little debt and wanted to settle their debt with creditors in a very short time. Only for those customers who had a debt amount of $1.000 and debt settlement companies used to provide creditors with only 0.50 cents on the dollar. That plan has worked well for all those people because they could manage that small amount of money very quickly & easily, and at the same time the creditors were also very happy to get their money back, not fully but partially.

And since then, the debt settlement companies have become something very different. Most debt settlement companies are considered fraud nowadays. It is suggested if you have a very small amount of debt, only then you should go for a debt settlement services or a debt settlement program.

In general, a debt settlement programs is offered to you by an agreement between you and your debtor, asking for a compromise between the bankruptcy filing and your current difficulties, but that's not right. Debt settlement companies might ask you to stop making payments to your creditors and pay that amount to the company of debt settlement, but then they keep that money in their pockets as their fees. This process continues for the next six months. After that when you start saving money to pay your creditors realise you have already spent four months of not paying to your creditors. Then you you find that you have become a defaulter and now the creditor can take legal action against you and as a result they can sue you too. But you won’t be able to do the same, because you are a defaulter.

The limitations for creditors to sue their debtors vary in different - different states, but in most cases is around two to four years.

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