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Some of the programs work by accepting your normal debt payments and holding on to them for a while and NOT paying your creditors. At some point your debts will be charged off and the company will try to negotiate lump sum payments for less than the amount of the debt which they will pay with the money they have been collecting from you. If your debts are not already in collections this will trash your credit and your creditors may or may not accept the payments offered by the debt settlement company. These companies also charge a pretty good amount - usually some percent of the debt you have. A credit counselor will generally look at your debts and your income and help you come up with a plan to meet your obligations. Generally they require a fixed, steady income (it is hard to come up with a plan when your income varies) so not all people can be helped. They can also help negotiate with your creditors to lower interest rates and to settle any charged off accounts. If your accounts are not already defaulted on this is a better route to go. Somewhere like the National Foundation for Credit Counseling can set you up with a free consultation with a counselor in your area.

Source(s)

nfcc.org

by Jessica

5 months ago

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