Debt Settlement Scams

As the American economy is going from bad to worse, most of the Americans who are in debt; looking to get out of the debt as fast as possible. And as well as most of them are turning to debt settlement services.

These Debt Settlement Programs were actually inaugurated to aid those peoples who had very little amount of debt and wanted to settle their debt fast with their creditors. Only those clients who have a debt amount under $1,000 and the debt settlement companies used to offer the creditors only 0.50 cents on a dollar. That plan worked very well for all the people because most of them could manage that small amount of money very quickly and the creditors were also very happy to get their money back though it was partially.

And since that time, the debt settlement companies have become something very different. Most of the debt settlement companies are regarded as scam. If you have a very little amount of debt, only then you should go for a debt settlement program.

Generally a Debt Settlement Programs offers you a settlement between you and your debtor and also asks you to compromise between your filing bankruptcy and your current hardship. But that is incorrect. Debt settlement companies ask you to stop the payment to your creditors and pay that amount to the debt settlement company but then they keep that money as their fees. This process continues for next six months. After that when you start saving money to pay your creditors you find that you have already spent four months of non payment to your creditors. You have become a defaulter and now your creditor can take legal steps against you and they can sue you. You will not be able to sue your creditors because you are a defaulter.

The limitations for the creditors to sue their debtors vary in different - different states, but in most cases it is somewhere around two - four years.