During economy crisis, most of the credit card holders wish to eliminate all their outstanding balances within a short period of time. Can it really be done? In United States, there are many debt settlement companies which have been established to meet the high demand from the debtors.

These service providers provide information to attract potential clients to sign up their debt relief plans. However, sometimes, there are unethical companies which provide “misleading” statements to the public.

As a smart consumer, it is indeed necessary for you to differentiate the common myths and the real facts. Don’t be trapped by empty promises and guarantees.

Myth No. 1: Every debtor is able to reduce his or her outstanding balances as much as 50% of the total debt

As a smart consumer, you should use your common sense. Do you think the banks or the credit card providers are willing to accept your settlement proposal? The debt amount forgiven is not reasonable and it is unfair to the creditors too. In general, getting 30% of your total debt forgiven is considered acceptable. Most of the creditors are more than happy to accept this offer. In certain circumstances, some creditors refuse to cut down the total debt. They prefer to reduce the interest rates or waive the annual fees.

Myth No. 2: All the debt settlement companies are reliable

There are many service providers which are in operation actively but not all of them can be trusted. There are scams which the consumers should avoid. Many companies are taking advantage to gain profit from their clients. They make money from the total debt forgiven by the creditors.

Some service providers even charge upfront payment to their clients. In some situations, the service providers even make use of the personal information of their clients for unlawful purpose. For your information, it is indeed unsecured to deposit the money into the settlement companies’ accounts as it is not insured by the Federal Deposit Insurance Corporation.

Bear in mind that these service providers are not banks. They can run away with your money without paying your creditors. Hence, it is always safer for you to handle your credit card debt on your own.

Myth No. 3: The debtors’ credit score is well protected

Many service providers normally tell their clients that their settlement plans do not affect the debtors’ credit score. However, in the real scenario, they don’t really take care of their clients’ credit rating. You need to accept the fact that any missed payment or late payment will definitely cause adverse effect on the debtors’ credit file. If the company you approach provides you guarantee, it is usually scams.

Myth No. 4: All creditors accept debt settlement offer

For your information, it is not compulsory for the creditors or lenders to accept settlement proposals because they have no legal obligation to do so. They can say No to you anytime.