If you’ve ever conducted online research for information on debt settlement, you likely came across a wide range of misconceptions. We know all that mixed information is confusing and can make understanding your financial options even more difficult, so we’ve gathered some of the most common myths associated with debt settlement to help separate fact from fiction. Our goal is to provide clear and honest information so that you can effectively decide if debt settlement is the right solution for you.
It Will Ruin My Credit Score
One common myth is that enrolling in a debt settlement program will ruin your credit score. This myth is one that’s a little more complicated.
When you enroll in a debt settlement program, you stop making direct payments to your creditors. Instead, your debt specialist acts as your representative and negotiates lump-sum debt payoff offers on your behalf. This means that, while your representative is working hard to settle your debt for less than owed, your credit report is showing those missed payments.
While these missed payments can result in a (temporarily) lower credit score, as settlements are made to pay off your debts, your score will increase over time. So yes, while debt settlement can initially affect your credit score, you can rest assured knowing it won’t last forever.
All Debt Settlement Companies are Scams
Despite some companies having a bad reputation, it’s important to note that not all debt settlement companies are out to cheat their customers. When researching debt settlement programs, you’ll want to find a reputable company that abides by the guidelines set forth by the Federal Trade Commission (FTC) . If a debt settlement company ever requires you to pay upfront fees, know that they’re trying to scam you. Debt settlement companies that are legitimate will never charge you for any upfront fees. Here at ACCS, we abide by all FTC rules and regulations for debt settlement services.
There is also a misconception that the services provided by a debt settlement company are unnecessary and that they collect fees to act as a middleman between the consumer and creditor. While it is true that you can contact your creditors directly about settling your debts, you would likely get a better outcome by using a debt settlement company. At ACCS, our debt specialists are experienced in negotiations and have existing relationships with creditors, which gives you the advantage.
Debt Settlement Covers All Types of Debt
One of the biggest myths around debt settlement is that every type of consumer debt can be covered.
Consumer debts fall into two categories. The first category is known as “unsecured” debts. These are debts that have no collateral backing and include items such as credit cards, medical bills, or installment loans. The second category is known as “secured” debts. These are debts that have collateral backing and include items such as mortgages and auto loans.
When it comes to debt settlement, only unsecured debts are eligible to qualify. Despite this popular myth, not all debts can be settled.
Debt Settlement with ACCS
At ACCS, we understand the significance that goes into making a personal financial decision, which is why we pride ourselves on being completely transparent with our clients. If you’re considering debt settlement but aren’t sure if it’s right for you, request a custom debt relief plan. Explore your options today at no cost and no obligation!