‘Til debt do us part
MOST PEOPLE WANT to lower their monthly
credit card payments. For anyone struggling with
bills, the offer to consolidate debt often is met with
a great sense of relief. Some people seek a debt-relief
company because they owe more than they can realistically manage to pay back in full, and they want to
avoid bankruptcy. Others consult a debt-relief company because they are fed up with their credit card
company over spiraling and unfair interest rates.
Beware! Scammers take advantage of people
who are in desperate situations, and those in debt
are prime targets. Often a promise to help reduce
debt is simply too good to be true. Here is what you
should know before doing business with debt-relief
Understand your goals
It is important to move forward with clearly
defined goals. How deep in debt are you? What kind
of monthly payments can you make? Are you prepared to pay a fee for this service?
First and foremost, understand the difference
between debt settlement and debt consolidation.
In debt settlement, a consumer who is behind in
payments can pay off the debt in full for less than the
In debt consolidation, the consumer takes out
a loan to combine debts into one payment, typically smaller and at a lower interest rate than the
Before contacting a debt-relief company, go
through your savings, checking and credit card
statements. Write down all of the expenses you can
eliminate. Call your creditors and inquire about a
lower interest rate. If you are still unsatisfied with
your debt level and you look at debt-relief companies, understand what they are and be wise in making your decisions.
Many companies claim that they can help you
alleviate debt. You may receive an unsolicited phone
call, email or letter offering to help you consolidate
your credit card bill. If you run an Internet search
for debt-relief programs, you will find plenty of
companies making guarantees that they can help.
Some of these companies are simply aiming to get
their hands on the fee you’ll be required to pay for
It can be hard to vet debt-relief companies. Some
companies make promises they cannot deliver on—
e.g., how much they can save you on your debts. Some
say they will save you 70 percent of what you owe.
However, even if they can negotiate settlements that
low, they neglect to tell you how much you will be
saving after you have paid their fees.
More in archives
On Costco.com, enter
“Connection.” At Online Edition,
search “David Horowitz.”
Some companies let you pay whatever you can.
They may be setting you up for failure. You should
know, before getting into any kind of agreement,
that to achieve any type of savings the repayment
schedule should take no more than three years.
Some debt-relief companies will put you on a four-year (or longer) schedule in return for accepting
whatever payments you can afford. What they are
not telling you is that, when all is said and done, you
likely won’t be saving much, if you can manage to
stay on the schedule at all. Again, their goal is to
continue to get their fee, with little regard to the
timely reduction of your debt.
How to avoid being scammed
✔ Beware if they charge you for their fees
upfront, as they may not have much incentive to
work hard or lower your debt.
✔ Don’t trust a company claiming that debt
settlement won’t affect your credit. Often
this is simply not true.
✔ If a company claims it can eliminate all of your debts, it is making a false
promise. This is a clever sales tactic
that preys on the eagerness of those in
a great deal of debt.
✔ Any company that
charges an initial consultation
fee cannot be trusted and is
looking to get the money
upfront even if you choose to
✔ Ask a lot of questions. Write down the
If you are in doubt,
there are options and people who can help. If you
choose to avoid bankruptcy by tackling your
debt head-on, beware of
companies that will prey on
your urgency. Make sure
you clearly understand your
goals and what type of realistic service you can expect to
get when approaching
debt-relief companies. C
I PURCHASED A camcorder from a small electronics
store [not Costco]. To be safe,
I purchased the manufacturer’s warranty as well. After a few months, the product
broke down. The store sent it
to a repair center to be ;xed,
but when I received it, it was
in worse shape than before. I
wanted my money back, but
according to my warranty the
store must send it back to the
repair center at least four times
before it can be refunded.
THE FIRST thing you should
do is go into the store and
speak with the person who
sold it to you. Often when you
deal with someone face to face
you can get the resolution you
seek. Tell them that you don’t
want your camcorder sent
back to the manufacturer’s
repair center. Tell
them you want to
deal with the store
itself, not the
turer of the
product. If they
can’t help you,
speak to a
say you want a
direct refund of your
product and do not
want to be processed
based on the manufac-
warranty on a product
should not mean you are
restricted from getting a
store refund when the
product is faulty. C
© 2012 FIGH T BACK! INC. ALL RIGH TS RESERVED.
David Horowitz is a leading consumer advocate. Visit his blog at
www.fightback.com. He is a frequent guest on radio and television
stations. Consult your local listings for dates and times.
Do you have a question for David?
Just log on to www.fightback.com and “Ask David.” For a fee, he will personally
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(Costco members receive a rebate off the normal fee.) Questions and answers of the
greatest interest to Costco members will be used in this column (with the permission
of the contributor) and will be posted on www.fightback.com.