Driving along the road, radio on, your ears perk up when you hear the ads that promise to help you erase your debt in a matter of months.
After the sleepless nights of worry about debt and the fear of answering the phone because it might be a bill collector, this could be the answer. You jot down the phone number of the debt settlement company.
Beware, Ohio residents. When it sounds too good to be true — it just might be.
Not all debt relief programs are created equally. In fact, affiliating yourself with one might wind up costing you.
It could wind up harming your credit in the long run
Once signed up with a debt relief company, you'll be told not to make payments as you normally would. By not making payments, a creditor will be willing to negotiate to get something. But your creditors will report those late payments to the credit bureaus, and the fact that you failed to pay the entire amount due will stay on your credit history for seven years.
The debt relief company could charge you a fee – often a big one
When you sign on for debt relief, you are given a lump sum figure you will pay every month. But not all of that goes to your debt; some of it goes to the debt relief company. Since your payment likely isn't itemized, you won't know just how much is going toward debt and how much to a third party.
A creditor still can sue you for the debt
Unlike with a bankruptcy that discharges your debts permanently, you could still be legally responsible for the balance.
The program comes with no guarantee that your debt actually will be resolved
Since you haven't paid your bills directly, you have accrued penalty fees and extra interest. All of that will go on your credit report.
Before your financial situation gets out of hand, call your creditors yourself and explain why you are having trouble paying your bill. You could receive a grace period, lower payments or a lower interest rate. And before you sign on with any service promising you financial miracles, it is advisable to learn your legal rights in an Ohio personal finance case.