Dealing with unsecured debt can be incredibly stressful. You may be struggling each month just to keep up with minimum payments while the balances barely budge. If your uncollateralized debts have become unmanageable, you may be tempted by the promise of debt settlement. But is this debt relief option right for you? And can you trust companies like GRT Financial?
GRT Financial markets itself as a legitimate, accredited provider of debt settlement services. But it’s wise to dive deeper before engaging any company to negotiate down your debts. Debt settlement can be helpful for some consumers, but you must know that it also comes with significant risks and downsides to understand upfront.
What is GRT Financial?
GRT Financial is a licensed company offering debt resolution programs that aim to help individuals settle outstanding debts with creditors for less than the full balance. Unlike debt management plans that spread repayment over several years, debt settlement involves negotiating a lump-sum payoff amount as settlement in full on the debt.
Note that, GRT Financial focuses on assisting clients with reducing high-interest, unsecured consumer debts like credit cards, medical bills, personal loans, and lines of credit. They represent and advise clients in debt settlement negotiations in exchange for a fee, but only if settlements are successfully reached.
The company markets itself as committed to upholding high standards of practice and ethics. GRT Financial is an accredited member of both the American Fair Credit Council, an association that promotes ethical debt settlement practices, and the Better Business Bureau.
GRT Financial states they do not charge any upfront fees before settlements are made but instead operate on a performance-based model. This helps align incentives so fees are only earned if the company delivers satisfactory debt reduction results for clients.
The Process and Risks
The debt settlement process generally involves:
- Stopping regular payments and allowing accounts to become delinquent
- Savings funds over several months to eventually offer as settlement
- Ongoing collections calls and credit impacts during this period
- Paying taxes on any forgiven debt at settlement
- Potential lawsuits from creditors before settlements are reached
As you can see, while settlements may eventually be reached, the process can be precarious along the way. Missed payments often trigger penalties and default interest rates. Creditors can still sue for full repayment amounts before a settlement is finalized. And credit scores plummet due to increased balances and delinquency.
Taxes also apply on forgiven debt unless you are insolvent. Overall, these risks make debt settlement most viable for those with assets and income that collections could otherwise pursue. Those with few assets may be better served by bankruptcy.
Is GRT Financial Legit and Trustworthy?
When researching any debt settlement company, first and foremost check for proper licensing and accreditations, such as those held by GRT Financial. Also, review the company’s BBB profile for any complaints and details on their response.
Look online for past client reviews to gauge satisfaction levels and look for any red flags around unexpected fees, fumbled negotiations, or misrepresented outcomes. Transparency around processes, risks, and potential outcomes are good sign. Opacity and bold claims are not.
Learn specifically how their model and fees work so you understand the financial incentive structure. Performance-based models like GRT Financial help align incentives in the client’s favour. However some debt settlement companies earn large upfront fees and then fail to deliver settlements. Tread carefully.
While GRT Financial markets itself as accredited and performance-based, as with any company, prudent consumers should verify these claims through objective research before engaging their services.
What to Know Before Using a Debt Settlement Company
If you are considering debt settlement as an option, keep the following factors in mind:
- It generally only applies to unsecured debts – Mortgages, auto loans, and any debt tied to an underlying asset cannot be negotiated through debt settlement. Only credit cards, medical bills, and similar uncollateralized debt apply.
- You must have sufficient savings to make settlement offers – Lump-sum settlement amounts need to be available when agreements are reached. This may require saving for many months while enduring collection pressure.
- The timeframe can be 2+ years – It takes time for accounts to go delinquent and to save up for settlements. Meanwhile, credit damage occurs. It is a difficult waiting game.
- Aggressive collections will continue – Creditors can still sue and use debt collectors while settlement negotiations drag on. Expect frequent calls.
When you understand these realities, you can determine if debt settlement aligns with your specific situation and temperament. It may help some consumers, but also poses challenges. Do your homework before pursuing this path.
How to Get Your Money Back from a Debt Settlement Company
If you engage a debt settlement company but then want to cancel and get your money back, first review your contract and any refund policies disclosed. Many companies withhold fees for any settlements completed but will refund any unearned fees paid upfront.
You generally need to provide written notice within a specified cancellation window, if one exists. For continued issues, submit complaints detailing the problems and your desired resolution to the Consumer Financial Protection Bureau, state regulators, or the Better Business Bureau.
If other options are unfruitful, consult with an attorney to understand if legal action may be feasible to recover funds, broken contract terms or misrepresentation. Reputable companies will be responsive to reasonable cancellation and refund requests. Failure to cooperate raises red flags.
Conclusion
While debt settlement may help some consumers reach resolutions with stubborn creditors, it also poses risks that anyone weighing this path must consider seriously.
Thoroughly research any debt settlement company like GRT Financial before engaging them to negotiate your debt agreements. And understand the process is often difficult and drawn out before seeing results.
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