You hear it on the radio and TV ads. They tell you the credit card companies don’t want you to know that you have the “right” to settle your credit card debt, but what does that mean? Can you go to court and tell the judge you heard on the radio you have the right to pay half of what you legitimately owe and borrowed? They sure make it sound like they are letting you in on some secret that it is some legal(or otherwise) right to settle debt for less than what you owe.
You Do Have the Right to ASK to Settle Debt Obligations
The truth is, you only have the right to ASK your lender(s) if they are willing to work with you. When you take a loan you sign an agreement with your granter. Guaranty nowhere does it have a clause that can force them to take less than full amount owed. They in turn, have the right to tell you NO. That is very misleading sales hype used by settlement companies. This implies a lender can be forced to agree to a lesser amount. Nothing can be farther from the truth. The final call is always with the lenders on this. The only reason they will settle debt would be in fact, cases where they feel it is to their advantage.
We will cover in more depth how debt settlement works in future posts, and compare this debt relief approach with debt management, credit counseling and bankruptcy options. For now we caution anyone looking into a firm to settle their debt to do their research. Trying to force settlement offers on lenders has a checkered success rate at best. Many debt settlement outfits also have been plagued by suits and Government enforcement over false and/or misleading advertising.
Just the semantics in the example I gave show there are still players out there whose hype needs fact checking.