Difference between debt settlement and negotiation?

Even if a debt negotiation company did clearly explain what was going on and it was in all of their documentation - based on letters from readers, none of the debt negotiation companies explained what they were doing. All of their victims had a vague recollection that they were paying a management fee, but they had no idea that their credit cards would go into COLLECTION while they were in the program. Per the new laws, the firm has to give you a good faith estimate showing you the length of time you'll be in teh program based on your ability to pay.

The U.S. Government Accounting Office (GAO) released a report on April 22, 2010 regarding widespread abuse in the debt settlement and debt negotiation industry. So you say, what's wrong with that - I'm getting a good deal by saving $6,000! Yeah, except almost any collection agency will accept 25% of the debt without much of a fight and many will accept 10%.

And you don't have to pay and admin fee to pick up the phone or send in a debt settlement agreement. AND you can mostly make a settlement within 6 months to a year. And be debt free.

It is REALLY easy to do it yourself. Let's say of the $20,000 in debt, one of the cards comes to $4,000. If the negotiation company gets the collection agency to accept $2,000, it will take you, it will take 10 months at $250 per month to have enough in your trust account to pay off just that one credit card.

But remember, your first 3 payments to the settlement company only paid the admin fee. That means your first credit card settlement is 13 months *after* you started sending them money. Going back to the example above, if you pay them $20,000 over a 5 year time frame ($300 a month.

2 months admin fee and $50 "maintenance" fees).