Those Debt Relief Companies Commercials

[rhinefire]

I don't get how those "deals" work. People 50K in debt now are only 30K in debt??? Is there another IRS I don't know about? If anyone can explain how those companies work I would like to hear rom you. I am not in debt but I shake my head watching them knowing how the IRS rips everything you own out from under you to get their monies.

 

[dmpi]

The IRS is just a creditor. Any creditor would like to get at least something vs. nothing. In the IRS case much of what they own are simply punitive fines due to the fact that the IRS can take years to figure out how much you really owe. The penalty is racking up the longer it takes. It's not uncommon to have five figure fines. Since we just talking excessive fines the IRS is more receptive to negotiating and getting a fair settlement.

 

[noonereal]

The IRS is just a creditor. Any creditor would like to get at least something vs. nothing. In the IRS case much of what they own are simply punitive fines due to the fact that the IRS can take years to figure out how much you really owe. The penalty is racking up the longer it takes. It's not uncommon to have five figure fines. Since we just talking excessive fines the IRS is more receptive to negotiating and getting a fair settlement.

Also, if the IRS feels you have no capacity to pay off the debt now or in the future they can wipe it away.

 

[ataraxia]

My favorite ad - the song just really sticks in your head and you can’t get it out. I even find myself humming it in the bathroom sometimes.

“I’ve a structured settlement and I need cash now
Call JG Wentworh. 877 cash now!”

 

[EdwinWillers]

I don't get how those "deals" work. People 50K in debt now are only 30K in debt??? Is there another IRS I don't know about? If anyone can explain how those companies work I would like to hear rom you. I am not in debt but I shake my head watching them knowing how the IRS rips everything you own out from under you to get their monies.

As I understand it, they negotiate with the creditors to reduce the person's overall debt - likely with a "something is better than nothing" spiel.

Problem is, it may work to reduce your debt, but it also has a very negative effect on your credit rating.

 

[Stealers Wheel]

These folks are collection agencies for the creditor. They get paid based on the amount they get you to actually pay. They are not working for the burdened taxpayer or debtor. They are working for the IRS or other creditor.

 

[OrphanSlug]

I don't get how those "deals" work. People 50K in debt now are only 30K in debt??? Is there another IRS I don't know about? If anyone can explain how those companies work I would like to hear rom you. I am not in debt but I shake my head watching them knowing how the IRS rips everything you own out from under you to get their monies.

Sorry I am late to the thread, but this is not about economics.

When you employ the services of a third party to negotiate with the IRS, or any other creditor, odds are what happens is a negotiated settlement amount and payment plan. That is generally what those services do, talk to the IRS or anyone else someone can owe money to on a plan to deal with that debt. Now this is not foolproof, and not everyone that owes something to the IRS gets the exact same "deal" or ratio of owed amount to negotiated amount.

What you see in an ad is just that, an example of what that company can negotiate down not all that different than an ambulance chasing law firm talking about cases they've settled for much more than an insurance company initially offered.

Also, there are other debt relief companies out there that turn debt into an investment vehicle. They both negotiate the debt level down *and* finance the debt (meaning the company pays off the negotiated amount and you pay that company on a schedule for the debt being paid off and the service.)

This is a big market, and it is obvious as to why.