Thinking about debt settlement?
If you're getting deeper in debt and having trouble keeping up with payments on credit cards and loans, debt settlement may seem like an appealing option. After all, who wouldn't want to reduce or erase a large amount of debt by paying just pennies on the dollar? That's what debt settlement companies often promise, and for someone who's overwhelmed by debt, it's tempting to jump into this seemingly easy solution to a difficult credit debt problem.
Debt settlement is rarely the right answer.
In reality, debt settlement is rarely the perfect answer to your growing financial problems. Debt settlement firms are for-profit companies that offer to negotiate with your creditors to let you settle or resolve your debt for a lump sum payment that's less than the total of what you owe.
However, before negotiating a debt settlement, the company may require you to deposit money in a special savings account for 36 months or more — which can be difficult if you're already having trouble making payments. You may also be asked to stop making payments to your creditors to induce them to settle your debt, but this can have a disastrous effect on your credit rating. With the late fees and penalties you incur, it may actually leave you deeper in debt. And through all this, your creditors are not obligated to accept a debt settlement and may start legal action against you to collect what you owe, adding to your financial troubles.
Debt settlement advice from ACCC
When you want objective advice about debt settlement, contact American Consumer Credit Counseling (ACCC). We're a nonprofit organization that offers free credit counseling to anyone who's ready to say "I need help with my debt." We can guide you through the pros and cons of debt settlement and its alternatives, and help you choose the best credit debt solution for your financial situation.
At ACCC, we have been helping consumers get out of debt since 1991. In your first free credit counseling session, our credit counselors will work with you to get a solid understanding of your debt as well as your income and expenses, and outline all the options available to you for reducing and eliminating your debt. We'll answer all your questions about debt settlement and how to pay off debt more quickly, as well as questions like "What is a good credit score to buy a car?" and "How do I consolidate credit card debt?" And we'll connect you with a broad range of free educational materials on our website that can help you learn how to budget more effectively, save for retirement, pay for college and manage your money to reach your financial goals.
Learn more about debt settlement and potential alternatives with help from ACCC.