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The way it is done (if approved) is that they'll pay your debts in full, thus effectively transferring your debt to them. You then pay them at a lower interest rate. Any other way will affect your credit score in a negative way these are good at what they do and BBB/Verisign approved etc: www ... they are an Experian company.

by robert g

1 month ago

Asker's Rating: 

Debt settlement companies are very different than debt consolidation. The consolidators negotiate a monthly payment, charge you a little more, keep the difference. Debt settlement comes in many forms. It was originally designed for people who wanted to do just that, settle in cash for a lower ammount. Now companies will collect money from automatic deductions and hold it in escrow until you have enough to settle. I can recommend Consolidated Credit for consolidation. They've been around a while and are very legitimate. With respect to debt settlement, my advice is go with an attorney when you have the cash to offer a settlement.

by David Green- 1 month ago

I don't trust them. Credit card companies are not going to settle your debt as long as your are still making monthly payments. Debt management companies cannot reduce debts that are current, You would have to default first. After a credit card debt has been delinquent for 180 days, it has to be written off and charged to P&L. Written off debts are bundled into large portfolios and sold to Junk Debt Buyers for pennies on the dollar. That is when debt management companies come into the picture. But, by that time your credit is trashed. Debt management companies will negotiate a settlement amount with the Junk Debt Buyer. You will make monthly payments to the debt settement company, who in turn will collect a 15 to 20 percent commission from the Junk Debt Buyer. The Junk Debt Buyer is under no legal obligation to accept the settlement offer from the settlement company. Debt management companies have been known to keep all of your money without making any payments to the Junk Debt Buyer. You are right to be skeptical. Before you can lower your debt you have to have defaulted. That means that your credit is alraedy in the dumpster. You are better off negotiating settlements on charge off debts yourself.

by ∞infiniti∞- 1 month ago

remember this....... they still charge you a fee and some interest ....... so how is that lowering your card ? deal with your creditor. in the end it is not how much you make but how well you manage your money. last but not least ... your last sentence is all bout staying in debt!!! $ 0 balance credit card to recharge. my god you will never get out of debt!!!!

by susta1951- 1 month ago

They usually charge quite a bit to do something you could do yourself and they usually don't put in nearly as much effort as they should. You can cut your balance by 50% when you settle an account. Basically, you need to be delinquent or in default and convince the collector that they're better off settling for half of what you owe than suing you for 100%. The process will really hurt your credit score.

by Edaphos- 1 month ago

There's a lot of confusion between Debt Settlement, Debt Management, Debt Counseling and Debt Consolidation. 1. Debt Settlement is 1/2 step below Ch 7 bankruptcy. They both take what cash assets you have and settle the debt for pennies on the dollar. DS also tries to extort a settlement from your creditors. Ch 7 BK also liquidates some of your assets to help pay a %age of your debt. Your credit is destroyed. 2. Debt Management is similar to Ch 13. You pay off your debts. They may renegotiate your interest rates to a lower, manageable amount, but you still pay off your entire debt. Your credit will take a hit, but not quite as bad. These people also charge a lot of money for stuff you can do for yourself for FREE. So, no, it's not worth the fees. 3. Debt Counseling doesn't change your current debt picture. They just show you how get out of financial trouble and stay out. They guide you into making a budget and sticking to it. How to cut expenses to make more money available for necessities (not nice-ities which are nice things to have but get people into trouble). 4. Debt Consolidation is actually a loan that if you can qualify for, combines all of your debt into a single loan with lower monthly payments. The overall cost however is higher because you are extending the payoff time and that costs you interest. It's harder to qualify for these because you are already in financial trouble. Debt Settlement is expensive and not guaranteed. They charge about 15% of the debt owed PLUS about 20% if they get a settlement. So where is your savings? The only one I trust are debt counseling companies that don't charge and are supported by the business groups. Don't start using a credit card while you are trying to get out of debt. You'll NEVER see the light of day if you do that.

by Dan B- 1 month ago

I would go on the Dave Ramsey website this guy is great and on TV late at night he is my hero I would say NO!!!!! Thaey take your money and run ((SEE DAVE))

by CHRISTOPHER P- 1 month ago

Ooooooh this is a very misleading issue here. If you ask advice of the debt management companies, they will ALWAYS tell you that you need their help, and they will save you tons of money! It's like asking an insurance salesman if you need life insurance. It's what they sell! You pay THEM to make your payments - and not all of your creditors will "cut a deal" with them. And it looks just as bad as a bankruptsy on your credit report, because you agreed to one set of terms when you opened those accounts, and now you're wanting to pay them much, much less than what you agreed to! You can compare that to getting hired to work some great paying job, and then at the end of the week, getting a paycheck for minimum wage. You wouldn't be happy - and these creditors will ruin your credit score for it, too. As for the other card with a $0 balance, once your credit report shows the CCCS status on it, that credit card company will automatically close that account - even if you never tell the debt management company about it! Your best bet is to educate yourself on budgeting, and stick with goals that you can meet. My husband and I started with a 3 month goal, but now I want to kill him because I can't get it through his head that when there's $200 in his hands, no groceries in the kitchen, and payday is a week away, you DO NOT take the kids to the japanese steakhouse!!! LOL! There's an issue I need help with. Anyhow, Good Luck with whatever you decide to do.

by Carlii- 4 weeks ago

From what I have read do not use any debt managment company. It appears on your credit report and second to bankruptcy it's about the worst thing you can do. They often take your money and do not bother to even pay the creditors. Try to work it out with the creditors on your own. Most likely they will not and it will go to collections. The creditors might put a judgement on you but that's still better than a credit management workout. At least you can pay off the judgement and wipe it off....think twice and do some serious research.

by Jamie G- 4 weeks ago

First you need to stop spending money that you don't have. Please do not consolidate or use a debt reduction company . It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. Student loans are the only debt that can garnish your wages for non payment without taking you to court first. Just list them out on a piece of paper or a spreadsheet and follow the plan. If you work the plan, the plan will work for you. A. Have a garage sale and sell anything that you no longer need or want. B.Get a temporary part time job, if you have one, get another. The wife too. When my kids were small, I worked at night to bring in extra money so that I would still be there for them during the day. Here is a plan that can help you. If you work the plan, the plan will work for you: 1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make. 2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on. 3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example: To start : Debt #1 (highest interest): minimum payment+ extra payment Debt #2 (middle interest): minimum payment Debt #3(lowest interest): minimum payment Debt #1: paid off Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment Debt #3: minimum payment Debt #1: paid off Debt #2: paid off Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment. That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have. 4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty. 5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life. 5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire. 5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest. You can do it and it isn't as hard as you think. Just follow the plan.

by Jeanne R- 4 weeks ago

Wow, you have asked for a complete overview of debt managment and credit restoration. I will be glad to asnswer it at a later time. It is a good set of questions. Blair - Upgrade My Credit 817-886-0302

by Upgrade My Credit- 4 weeks ago

Eliminate your debt in 6-8 months! That's the claim Debt Settlement companies promote, on the internet, in small ads in the back of magazines, spammed into your email inbox. Can they really accomplish that?The answer is yes, no, and run. Debt Settlement companies sell you a program which requires you to deposit (or allow automatic withdrawals of) a sum of money into a special savings account. Once this account has grown to a certain level, the debt settlement company will make a settlement offer to one of your creditors for a lump-sum payment. There's the "yes" part of the answer. Yes, in theory, it could work. The "no" part of the answer is related to the "run" part, which I'll explain next. While the save-and-settle plan can work, it's problems are not insignificant. First: you are advised to stop paying your debts immediately. This alone will result in increasing damage to your credit report, as well as joyous, frequent and friendly calls from the creditor's collections department. Getting those already? Well then, debt settlement won't help you there either as it does absolutely nothing to put the creditors you owe to rest immediately. Second: part of your monthly deposit to savings is taken by the settlement company in fees. While fees vary, rates of 15-20% of the outstanding debt are common. Note that that's 15-20% of the outstanding debt, not the amount it's settled for. If you are attempting to settle a 10,000 credit card debt, you will pay $1,500-2,000 to the settlement company alone, regardless of the amount the debt is eventually settled for. Meanwhile, as you are accumulating the settlement funds, your creditor is increasing your debt with fees, interest and late charges...making the process of saving up a settlement rather like trying to hit a moving target. You'll have to save enough to not only pay a significant portion of the debt itself, but also the increasing interest and fees added on top! At this point you could've very well made the minimum payments on the debt plus additional principle payments to wipe the debt out on your own...and you'd have done it 15-20% less expensively to boot. Third: Time is against you. Let's assume that you've managed to accumulate enough cash to settle the first debt. Now you move on to the second. By now several months have passed and your remaining creditors are becoming impatient, rude and perhaps threatening with you. Some will have sent your account out to a third-party collector, some will have assigned it to an attorney, some will do both. Your credit report is now full of 30-60-90 day lates, perhaps charge-offs. The only guarantee is that absolutely none of your creditors will sit around patiently and do nothing waiting for you to make them an offer. This little fact gives reason to the "run" part of the answer. Fourth: You are a target. Some of the Debt Settlement Companies have decided that as part of the "services" they offer, they will contact your creditors for you and inform them that you've entered a debt settlement plan. They are instructed to wait, and a settlement offer will be forthcoming. The only part of this message the creditor will hear is "savings" and "payment". They know that if you have money to put into a settlement account monthly, you have money to pay them. They will run to the courthouse to make certain that money is diverted to them ASAP. Informing the creditor that you have disposable income but aren't going to send it to them...will bump you to the head of the line for recovery litigation. Welcome to wage garnishment and judgements! They couldn't care less about your "debt settlement plan". They only care about what you owe them. By this time your Debt Settlement Company has received it's percentage and informs you that it cannot do anything further for you.... but have a nice day. The Aftermath: At absolute best, a debt settlement company will leave you with a credit report full of negatives, perhaps one or two settled accounts (which report as "settled for less than full balance"- which is a negative) a 1099 form requiring you to pay taxes on the forgiven portion of the debt and a really bad taste in your mouth. At worst, they'll leave you with a mailbox full of judgements, a wage garnishment, a horrendous credit report, and a settlement savings account that you may have trouble accessing to close out. And for this, they'll have charged you 15-20% of what you owed. You could've filed bankruptcy for less money and possibly walked away with less damage to your credit....... All of this is assuming you've found a legitimate debt settlement company (oxymoron if I ever saw one defined) there are far too many out there that will happily take your deposits and then disappear completely,leaving you with nothing but a disconnected phone number & bad email address. If you're going to make a mess, do it yourself. If this is the way you want to approach your debts, do the savings yourself.Deposit the money monthly into a savings account, and once you've accumulated enough to pay 50-70% of the first debt- attempt a settlement yourself. If you need it, you can't afford it. A 10,000 debt, settled at 50% after 6 months will require you to deposit $833 every month into that savings account. Can you save that much monthly? No? Me either.

by caddi814- 4 weeks ago