Why smart businesses love debt collection services?

Asked Jul 01, 2017
They can negotiate with your creditors to reduce the amount you owe. Consider all of your options, including working with a nonprofit credit counselor, and negotiating directly with the creditor or debt collector yourself. Before agreeing to work with a debt settlement company, there are risks that you should consider:

Debt settlement companies often charge expensive fees.
Debt settlement companies typically encourage you to stop paying your credit card bills. If you stop paying your bills, you will usually incur late fees, penalty interest and other charges, and creditors will likely step up their collection efforts against you.
Some of your creditors may refuse to work with the company you choose.
In many cases, the debt settlement company will be unable to settle all of your debts.
If you do business with a debt settlement company, the company may tell you to put money in a dedicated bank account, which will be managed by a third party. You may be charged fees for using this account.
Working with a debt settlement company may lead to a creditor filing a debt collection lawsuit against you.
Unless the debt settlement company settles all or most of your debts, the built up penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves on the debts it settles.
Using debt settlement services can have a negative impact on your credit scores and your ability to get credit in the future.
Answered May 19, 2021

TIP: If it's not your answer to this question, please click "Leave a Comment" button under the question to communicate with the question owner.