New Jersey Debt Negotiation Myths and Facts
For people who may not be aware Debt settlement and Debt Negotiation are one in the same. Debt Negotiation is the action performed and the result is a Debt Settlement.
Myth: Debt settlement companies can stop collections? Fact: The truth is that a debt settlement company does not have the legal power to stop the creditors/collectors from calling. Many will advise to send out cease and desist letters but this is something that can be done without the assistance of the debt settlement company. Only law firms have the legal power according to the FDCPA (Fair Debt Collections Practices Act) to stop the collectors from calling. Myth: Debt settlement is legal in all states? Fact: Yes it is legal in all states; however the issue is most companies are not correctly set up to be legally operating in all 50 states. Therefore making it imperative to get a law firm that can work within the legal realm of your state. Myth: Debt settlement companies operate the same as law firms? Fact: This is not true, there are certain advantages that law firms have over debt settlement companies. For one a law firm can legally still negotiate a debt after a collector has issued a law suit, a company cannot. Some companies may claim they can but are not operating under the law which could negatively affect the outcome of your situation. Myth: Debt settlement has no effect on your credit report? Fact: There is no way to get around the fact that your credit report will be negatively affected by going through this process. The reason being is that the bills must be in default for the creditors to be willing to negotiate a settlement. With that being said the consumers who are already in arrears will not have anymore damage done to their credit report from this process, in fact once the settlements begin going through the credit report will be positively affected. For those who are current the beginning of the debt settlement process will hurt their score, but again once the settlements are being made it will have a positive rebounding effect on the credit. Myth: You cannot be sued once you are being represented by a debt settlement company? Fact: This is untrue, the reality is at anytime a creditor can sue after you have stopped paying them, whether you have hired a debt settlement company or retained the services of a debt settlement law firm. The difference is that the debt settlement company cannot legally help you at this point, whereas the law firm can offer advice and also still negotiate the debt and keep it from ever going to court and getting a judgment. Myth: You can easily do debt settlement on your own?Fact: Yes debt settlement can be done without the assistance of the either a company or law firm. But this is not advised for many reasons. One being every creditor is different and only an experienced organization will know how to properly deal with them. Another reason is a creditor/collector treats consumers much differently then when dealing with a third party. And last but not least you must have all the paperwork done correctly to a T or risk putting yourself into a much worse situation. Myth: Debt Settlement Company with the lowest fees is usually the best? Fact: The old cliché “You get what you pay for” applies greatly to this industry, many people treat this process like buying a car and go for the cheapest possible company, which is a huge mistake. Not all companies or law firms are the same just like any other service out there. You must judge a company based on its performance and history, not just the fees. Myth: The best place to research a debt settlement company is with the BBB? Fact: The BBB is an organization with no teeth, meaning they cannot do anything to help out disgruntled client other than list on their website that the company is unsatisfactory. However it is a good sign if the company has an "A" rating and if the company has an "F" rating this is a clear signal to avoid doing business with that particular organization.
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