With the struggling economy, people today are having difficulties paying their debt and turning to debt settlement as an option for debt relief.
Statistics have shown that most of the time after a consumer consolidates his debt, the debt eventually comes right back.
Many times, a new budget is not set and unexpected expenses arise.
One main reason people are choosing debt settlement is because their debt is too high for them to manage and pay off to avoid bankruptcy.
Another reason, thousands choose because of the increasing interest rates and credit companies who refuse to lower them.
Debt settlement does seem very appealing because of the lower interest rates as well as lower monthly payments.
These companies make some pretty good claims when it comes to financial aid, but sometimes it can look too good to be true.
There are some companies that are not providing to the consumers like they have promised and sometimes do nothing other than steal your money.
Lower monthly payments sometimes do not actually exist with debt settlement when the rate is lowered but the term is extended.
It still all equals out to a high interest rate.
With an extended period to pay your debt, you are in debt longer while paying more to the lender.
This is the reason why some of these companies are able to stay in business.
Companies working with consumer debt may sometimes charge a lot in up-front fees, monthly fees and end up not sending money to your creditors until enough funds have accumulated to settle them.
At this time, some of the forgiven debt may be taken as a fee.
Once your debts have accumulated more interest over time, and considering the increased taxes on the forgiven debt, you are not saving money at all.