Looking at the current economic state of affairs where many are left jobless or have been receiving pay cuts, it comes as no surprise to see many people trapped in debt issues, especially credit card debts. To combat this, debt settlement has emerged as one of the most effective and functional ways to get rid of debt. Those who are considering this service should be extremely aware of the fact that despite debt relief services come with many advantages and benefits, they also come with a few disadvantages of their own. Let us browse through some of the primary disadvantages of debt settlement services.
The main disadvantage is the fact that you might actually start increasing your debt instead of reducing it. Through debt relief plans, you would be able to make a single payment to the debt relief company, and this may make you start using your credit cards again. In return, you are actually increasing your total debt instead of reducing it.
Another disadvantage is the fact that debt settlement solutions do not come free, the agencies normally charge a fee for their services, usually upfront. This amount could range from a few hundred dollars to even a few thousand dollars. Some of the agencies also require you to commit to an amount of monthly fees in addition to your settlement amount.
In case you do not pay your settlement amount on time, you risk being charged interest by the debt relief companies. So if you miss payments, you could end up paying more to the debt relief agencies and this would add on to your debts.
Finally, the monthly payment amounts also tend to be higher compared to minimum amounts that credit cards charge. This would prove to be an extra burden on you if you are not able to cope with the additional suites that you need to pay every month when you sign a debt settlement letter with one of the agencies. This could prove to be disastrous financially for you.
Concluding, make sure you can afford to pay for whatever you commit to when you sign with a death relief agency. As they say, better safe than sorry.