How do you feel about debt management companies? Can they actually help you reduce and get out of debt?
My advice is to stay away from debt management companies. If you go to the Federal Trade Commission’s website, you’ll find that debt management companies receive more complaints than just about any other type of business. In other words, tons of them are operated poorly to the point of incompetence, or they’re just plain scams.
Debt management companies don’t wave a magic wand and make your problems disappear. The only way a creditor will take less than they’re owed is if you’re way behind on payments, and they’re afraid they won’t get paid. And, if it comes to a settlement situation, you have to watch your back. Always make sure you get any settlement offers and agreements on your own and in writing—no exceptions. And never allow a creditor to have electronic access to your bank accounts.
But the big problem is that you need to fix your behavior when it comes to handling money. You can do that a lot cheaper than any company. But if you don’t get control of your money, start living on a budget, and living on less than you make, your debt problem is going to hang around your neck for the rest of your life!
* For more financial help, please visit daveramsey.com.