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Debt Settlement Companies

What you need to know about debt settlement companies.

Debt settlement companies make some bold promises, often boasting in their advertisements that they can help you settle your debt for just pennies on each dollar you owe. But before you choose to work with a settlement company, it's wise to get some objective opinions about debt settlement companies and to better understand the pros and cons of debt settlement versus other strategies for paying off debt.

How debt settlement companies operate.

To help you get out of debt, debt settlement companies will advise you to stop paying your bills to creditors. Instead, you'll pay money each month to a savings account managed by the settlement company. After several months, when your accounts are significantly overdue, the settlement agency will make a debt settlement offer to each of your creditors, offering to pay off your debt with a lump-sum payment from your savings account. Ideally, the amount you'll pay is significantly less than the amount you owe. Creditors may accept the offer if they believe it is their best option for getting some money from you.

If the creditor accepts your offer, you'll pay a fee to the debt settlement companies – usually 25% of the amount you saved. You'll also pay taxes on any amount that was forgiven by your creditors. But if the offer from the debt settlement companies is not accepted, your creditors may choose to turn over your account to a collections agency, which can be a nightmare. Or they may sue you for the amount you owe plus interest, penalties, and legal expenses, adding even more to your debts.

How does debt settlement affect your credit and is debt settlement bad for your overall finances? Well, whether your debt settlement offer is accepted or not, the fact that you have stopped paying your bills for months will significantly damage your credit for years. You may not be able to get a credit card, take out a car loan, rent an apartment, or buy a house for years to come. That's why it's important to understand the potential risks of debt settlement before talking with debt settlement companies.

Get advice about debt settlement companies from ACCC.

At American Consumer Credit Counseling (ACCC), we offer free credit counseling and low-cost financial services designed to help you get out of debt quickly and plan to live debt-free in the future. As a nonprofit organization, we offer objective advice about debt settlement companies and debt settlement vs bankruptcy vs. debt consolidation. At your free credit counseling session, our professionally certified counselors can help you better understand how debt settlement companies work, and what other options you have available to you for managing your debt. Take this first step in your journey out of debt – contact us today for a free counseling session in person or by phone.

American Consumer Credit Counseling (ACCC) is a non-profit debt relief agency offering consolidated credit counseling and consumer debt solutions. If you have debt to consolidate, we can help you consolidate credit without taking a loan or paying high fees like some debt management companies charge. A fair, effective debt reduction service, our debt management program simplifies your payment responsibilities and often results in reduced interest rates from your creditors. As a leading national debt consolidation firm, ACCC has also been approved by the Department of Justice to provide credit counseling for bankruptcy both the pre-bankruptcy credit counseling certificate and the post-bankruptcy debtor education. Homepage Footer: American Consumer Credit Counseling (ACCC) is a non-profit credit counseling agency and debt consolidation company that provides help to anyone who is asking, "How do I get out of debt?" Our services include credit counseling, financial education, debt consolidation and debt reduction services for consumers nationwide. Our certified credit counselors have helped thousands of individuals and families find debt relief through debt management plans that consolidate debts and debt payments to pay off credit cards and eliminate debt. We also provide bankruptcy counseling and bankruptcy debtor education services, including pre bankruptcy credit counseling for a bankruptcy certificate.

American Consumer Credit Counseling - Consolidate Debts - Better Business Bureau American Consumer Credit Counseling - Consolidate Debts - Mass Housing Approved National Industry Standards for Homeownership Education and Counseling American Consumer Credit Counseling - Consolidate Debts  - Council on Accreditation American Consumer Credit Counseling - Consolidate Debts  - NFCC Member