The Naked Truth About Debt Reduction

by : Herman Tabb

The downward spiral of the economy caught many off guard. In the past 5 years, we've seen our credit card payments double, our gas prices nearly triple, an increase in our living expenses and one of the safest investments in the past hit rock bottom, real estate.

The ingredients above would describe a state of chaos. What industry could possibly prosper in such a situation? That industry would be Debt Reduction programs. Why? These programs sound like saviors when heard on radio or television. They boast about avoiding bankruptcy and paying 40% of your debt to become debt free within 18- 36 months. Okay, where do I sign, before you sign lets dissect the program.


Have you ever thought to ask about the credentials of the employees. After all, they do hold your financial future in their hands. Typically, these environments operate similar to a call center. In most cases, the only educational requirement is a high school diploma. Individual companies may have a two-week training course. Would you allow a mechanic to change the oil in your car with such limited training?

No communication

Communication is the key to any relationship. Many debt reduction programs encourage consumers to cease communicating with their creditors. Is this smart? We understand that the letters and calls at times may be overwhelming, but there has to be a better way. Bottom line, you need to know what's going on with your finances at all times. The lack of communication may result to legal actions taken place against the consumer that could have easily been avoided.

Creditors give less of a deal to debt settlement companies

Some creditors grade credit accounts in accordance with the behavior of their customer. For example, if you obtain the services of a traditional debt settlement company, your account is outsourced to collections. This expedites everything. Now once your accounts charges off, the probability of legal actions taken place against you have increased. In addition, the creditor will give you the consumer a better discount than they will a debt reduction company.

Potential Litigation

Please understand defaulting on a credit obligation could lead to financial disaster. This entails garnishment of wages, depending on your state, liens against property, real or personal or levies against bank accounts. Do you want to be in this situation? There has to be a better way.


Consumers are told to stop paying any unsecured credit obligations. Instead, send payments to the debt reduction companies. Most cases, money is saved and no interest is paid to the consumer.


Are you sitting down? If not, please do. I don't want you to faint and fall out. Debt reduction Companies charge thousands of dollars in fees. These fees are called service fees. For example, if you have $60,000 in total unsecured debt, most companies will charge you $9,000.00 to help you. This astronomical fee must be paid before the debt reduction company begins working for you. What if I told you that you, alone, might be able to pay as low as $18,000.00 to settle this debt? What could you do with $9,000.00 that would have other wise gone to a tradional debt reduction company?

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