What Fees Can I Expect with CreditSolutions.com?
CreditSolutions.com makes big promises, including settling your debt for as much as 50% less than you owe, getting you out of debt in just three years, and lowering your monthly bills substantially. CreditSolutions does not specifically explain what they do or the costs associated with their service online, and many customers have found unpleasant surprises as they deal with this company, both in terms of fees and later unexpected costs.
Credit Solutions is a debt settlement company. In order to settle your debt for a much lower amount than is owed, all of your debts will first have to go into default. You will deposit funds for settlement into an account designated for that purpose and the company will collect their fees for the service. The company then negotiates with your creditors to settle your debt for less than is owed. While this is a viable strategy for debt reduction, you should be aware that the debt settlement process does substantial damage to your credit and can be quite stressful.
How much will you owe Credit Solutions? While they are not open or transparent about the associated fees, approximately 15% of the total debt is not uncommon in the industry. The New York Times recently reported on a couple using this company's settlement service who found themselves out nearly $4,000 dollars on an original $25,000 total debt. Payments are typically withdrawn from your checking account on terms set up when you sign up with the company. Cancelling your account and agreement can be quite challenging.
It should also be noted that the state of Texas has sued Credit Solutions, accusing the company of “false, deceptive and misleading acts and practices.” More information on the potential costs and fees associated with this debt settlement service can be found at The New York Times Online.
Several other significant costs and fees can also come with debt settlement. If the company does not settle a debt successfully, customers should be prepared for the late fees, overcharges and high interest rates that comes with default. This can dramatically increase debt. Furthermore, if debt settlement is successful, the IRS considers the sum saved to be earned income and this amount will be taxed. Even if the settlement process is a good experience, you should be aware that Uncle Sam will expect his chunk of your savings come next April 15.
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