The latest applicant has asked some really good questions about debt service relief and the associated costs. Debt relief service costs are real and they are charged by the companies that will help you with your debt solution. How much they cost really depends on just how much debt you have and what option or options you eventually decide on as solutions to your debt problems.
We always like to first learn how much debt the customer has and what it is costing him or her today. The customer should know this as well. Unfortunately this applicant only told us that they had credit card debt. Credit card debt is usually in the 20% range for most bank credit cards and 30% for store based credit cards. For example on forty thousand dollars of credit card debt, this client might be paying as much as $8000 a year in interest charges alone. Compared to a 7% loan, that charges interest on the declining balance this is very expensive. Remember that store credit card debt has even higher charges.
Debt releif service costs can include the following, again depending on the solution that is selected. There are transfer fees to transfer the debt to a new loan, hopefully at lower interest rates. There may also be registration fees and miscellaneous processing fees. There may also be an annual management fee for as long as the company is managing your debt. There will be also an interest charge on the outstanding debt which should be much lower than the rate that was paid on the credit cards, unless your credit rating indicates that you are a high risk client. In this case fees and interest rates my be higher to reflect the high risk that comes with a bad credit rating.
As a consumer who is in this kind of situation, they need to compare the costs they are currently paying along with the monthly payments to the total fees and monthly payments they would pay under a debt relief situation. This comparison should tell them which is the better solution. Neither solution is going to be very good, however you are selecting the best one available given your situation.