Michigan Debt Settlement Companies

It is not uncommon for people to attempt to resolve their debt problems by working with debt settlement companies rather than filing for bankruptcy. Do debt settlement companies work? Yes, some of them can help you. However, that being said it is difficult and you do not have the protection of the bankruptcy courts. In other words, if you are bound and determined to pay back creditors it is better off to have the protection of the bankruptcy courts during a chapter 13 bankruptcy.

What will the debt settlement company due for your debt in Michigan? First, these companies will ask you to provide a detailed list of your outgoing expenses. They will then take all your credit cards or non secured debt and contact them to try to work out a deal of a percentage of the balance you owe to the credit card companies. The problem with these agreements and working with these debt settlement companies is they continue to take part of your money to make payments to your creditors. This in itself does not help your debt by adding more debt to your situation. In addition, these companies operate in a way where you pay them money and then you rely on them to distribute the funds to your creditors based on an agreement they have with popular creditors. As an example, a debt settlement company may ordinarily work with creditors such as Bank of America or Citi Card to only pay 35% of your total amount owed on the credit card or any non secured debt for that matter.

People are attempting to preserve their credit rating by doing anything to pay off their debt. The problem with these debt settlement companies is you are now sending them checks and they are sending them to the creditor. Often times they do not send out payments on timely basis and their contracts are not binding so the creditor does not have to abide by the agreement to accept payments for less. If they are sending out checks late you will continue to receive calls from the creditor for the amount you owe.

Saving your credit may be important to you. However, you don’t need a debt settlement company to work out a deal with your creditors. You can do this yourself if you are truly against filing bankruptcy. In addition, if you are adamant about paying off the debt you own you can always file Chapter 13 and make payments to your creditors under the protection of court or Michigan Bankruptcy law. This is often done at a lower rate than what debt settlement companies can negotiate. In addition, the court makes sure you can afford to pay the agreement. If filing for a Chapter 13 the payments range from 3-5 years based on your income.

People often ask if these companies don’t work then why are they still around? They can work depending on your situation. However, you are giving up control to another company for your finances and if you are worried about your credit, your credit report will still reflect as account be settled for less than the total debt owed and therefore you are still tarnishing your credit.

Yes, bankruptcy will ruin your credit. However, from experience you can file a chapter 7 bankruptcy while reaffirming your home and vehicles and continue to build a positive credit history while continingto pay off the debt of the things you kept. In as little as 6-7 months you can quickly rebuild your FICO score up to mid 600’s after filing a bankruptcy.