Skip to main content

Sound Advice: December 11, 2024

Debt Relief Offers Are Time Bombs

Many of these "offers" can come with hidden costs, high fees or unfavorable terms that can make your financial situation worse in the long run.

Some common reasons to be cautious about these offers:

1.     High Fees: Some companies offering to reduce credit card debt may charge hefty upfront fees, or they may require you to pay monthly fees. In some cases, these fees can eat into any savings you might get from the debt reduction.

2.     Debt Settlement Scams: There are a number of debt settlement companies that claim they can reduce your debt by negotiating with your creditors, but they may ask you to stop paying your credit card bills entirely while they "negotiate." This can cause late fees, higher interest rates, and seriously damage to your credit score.

3.     Tax Implications: If a company settles your debt for less than what you owe, the amount of the debt forgiven may be considered taxable income by the IRS, meaning you could face a tax bill on the amount of debt that was wiped out.

4.     Impact on Credit Score: Some debt reduction or settlement programs can hurt your credit score, sometimes more than sticking to a regular repayment plan. A debt settlement can be reported as "settled for less than the full amount," which can be a red flag for future lenders.

5.     Reputable Alternatives: Before considering any offers, it’s often better to explore other, more reputable options like a balance transfer, debt consolidation loan or negotiating directly with creditors to lower your interest rate or arrange a payment plan.

It’s always a good idea to read the fine print, check for any reviews or complaints about the company offering the service, and consult with a financial adviser or credit counselor before committing to anything.

N. Russell Wayne

Weston, CT  06883

203-895-8877

 

Comments

Post a Comment

Popular posts from this blog

Sound Advice: March 10, 2021

The ABCs of Stock Picking After decades of analyzing stocks (and funds) and investing for clients, I'm happy to share in plain English what's involved, what works, and what doesn't.  Keep in mind the reality that successful stock picking is an effort to maintain a good batting average. In baseball, a batting average of .300 or better is considered quite good.  With stock picking, you need to do better than .600, which means you have many more winners than losers. No one gets it right all of the time.  It's not even close.  Wall Street shops all have their recommended lists and the financial media regularly hawk 10 stocks to buy now. Following that road usually is a direct route to disaster.  Don't be tempted. Let's begin with the big picture: The stock market goes up and down over time, but the long-term trend is up.  When there's a rally under way, everyone feels like a genius.  When the market hits an air pocket, though, with few exception...
Post a Comment
Read more

Sound Advice: January 3, 2025

2025 Market Forecasts: Stupidity Taken To An Extreme   If you know anything about stock market performance, you can only gag at the nonsense “esteemed forecasters” are now putting forth about the prospective path of stocks in the year ahead.   Our cousins in the UK would call this rubbish.   I would not be as kind. Leading the Ship of Fools is the forecast from the Chief Investment Strategist at Oppenheimer who is looking for a year-end 2025 level for the Standard & Poor’s Index of 7,100, a whopping 21% increase from the most recent standing.   Indeed, most of these folks are looking for double-digit gains.   Only two expect stocks to weaken. In the last 30 years, the market has risen by more than 20% only 15 times.   The exceptional span during that time was 1996-1999, which accounted for four of those jumps.   What followed in 2000 through 2002 was the polar opposite: 2000:      -9.1% 2001:     -11.9% ...
Post a Comment
Read more

Sound Advice: June 17, 2020

Rock and a Hard Place Regardless of your age, impressions from childhood linger.  As the first days of summer approach, we all remember the feeling that accompanied the end of a school year.  Yet as much as many of us would like to believe we again have the summertime freedom to do as we wish, the reality is quite the opposite. Although months of confinement and limitations on social interaction have increased our personal discomfort and severely impacted the business community, our current situation is not analogous to the end of any school year.  It’s quite the opposite. There is every reason to continue wearing face masks, social distancing, and avoiding close contact with others.  Nothing suggests that we can modify our behavior significantly or resume patterns of daily living we enjoyed only a few months ago. There are no meaningful advances in medical treatments.  At best, there are attempts to combine different approaches...
Post a Comment
Read more