Debt Settlement and Debt Management: There IS a Difference

Mark — Mon, 11 Feb 2008 02:10:07 +0000

An article on mLive.com tells of a possible scandal involving a debt settlement company named ClearYourDebt.com. Apparently, clients who signed up for the company’s services were having their checking accounts drafted yet none of their creditor’s accounts were being paid. This situation not only caused more bad blood with the creditors but with the banks as well as several would-be clients of ClearYourDebt.com wound up overdrawing their accounts. Fortunately, upon investigation, the banks realized that the monies were being mishandled and reversed the penalties and fees to the consumers.While the finer points about this situation can be found on mLive.com, the moral of the story is an important one that I wanted to comment on here and that is the distinction between a debt settlement company and a debt management company. According to the article, the distinctions between the two are

Debt settlement companies are not regulated by the state, but debt management companies are.

With a debt settlement company, consumers usually pay a service fee and the company sets aside money in an escrow account. Then, the company pays off one creditor at a time… The debt settlement companies also sometimes negotiate with a creditor on a lower settlement amount…

With a debt management company, consumers pay monthly and the company also pays the consumers’ creditors on a monthly basis. Debt management firms also can help to cut the consumers’ interest rates…

So let this serve as a ‘debtors beware’ sort of consumer warning. If you are in need of debt intervention, be sure you are clear on which of the two, debt settlement or debt management, you are getting involved with. In either case, be even clearer on the terms of the contract and how your arrangement will impact your finances and credit score moving forward.

Read the full article at mLive.com.

Sound Advice if You Are Considering Bankruptcy

admin — Sat, 03 Nov 2007 01:03:14 +0000

If you are considering bankruptcy, you might want to check out a post titled Bankruptcy Vs Bankruptcy Alternatives on the Bankruptcy Lawyer’s Blog. In it, Paul Sarwana draws out differently scenarios for those who are facing bankruptcy and offers alternatives such as

Personal Money Management
Negotiation with Creditors
Debts Consolidation
Debt Settlement Service

He points out that filing bankruptcy these days is not nearly as easy as it was in the past so seriously considering these alternatives might be the only options if one is not eligible to file bankruptcy under the new bankruptcy law. Read the full post at Bankruptcy Lawyer’s Blog.

Debt Hacker: Tools for a Debt-Free Life » Debt Settlement

Debt Settlement and Debt Management: There IS a Difference

Sound Advice if You Are Considering Bankruptcy