Debt Settlement & Credit Counseling Companies

[boosami]

I am ready to settle this one once and for all.

Consumer Reports, an independent, non-profit, trusted group since the 1930s advises consumers to stay away from debt settlement companies, and in the March 2009 magazine listed them as scams to avoid.

Are you struggling with debt and cannot make ends meet? Have you cut out luxuries and still can not afford to live and pay your creditors? Here is what to do, in order, based on advice by Consumer Reports:

1. BUDGET: Budget your money and try to make ends meet. If you need help, post your information to this board and we will help you. Read the tips on being frugal, and try to amend your lifestyle if necessary. If you do not change what caused the debt in the first place, it is not worth getting rid of it because it will come back.
2. NEGOTIATE: Try to negotiate directly with your creditors to lower interest rates, or come to a compromise on some sort of payment plan that reduces your payments/interest. Call, ask to speak with a manager, and explain your situation. They do want to be repaid and will often negotiate instead of taking a loss by sending an unpaid accout to collections.
3. GET HELP: If you are unable to negotiate successfully yourself, get a non-profit credit counselor through the National Foundation for Credit Counseling. This is often free, or provided with minimal fees that are not based on the balances you owe.

3 steps--that is all. End of discussion.

Source: Consumer Reports: Article on Debt Settlement Scams

[disneysteve]

Originally Posted by boosami

I am tired of the fake users posting spam about the topic

Thank you. I'm tired of it all, too. Jeffrey, can't the moderators have the authority to just delete these threads when they start. They all seem to be from new users making their first post. Just delete them.

[Joan.of.the.Arch]

Indeed!

[jeffrey]

Originally Posted by disneysteve

Thank you. I'm tired of it all, too. Jeffrey, can't the moderators have the authority to just delete these threads when they start. They all seem to be from new users making their first post. Just delete them.

It's a tough call that I struggle with on a daily basis - I understand the frustration, but at the same time I don't want to delete a post from someone that really is looking for information because some of are legit (I have accidentally deleted ones in the past I thought were spam to find out they were not). If the post is within our basic forum rules and isn't promoting a specific site, then I tend to leave them live.

This thread should be very helpful - we can now simply post this url for any questions like that

[disneysteve]

That works.

Of course, the other thing would be if all the regulars just ignore these threads. Don't post to them, even to say it is a rip-off, because that just keeps moving it back to the top. Ignore them completely and they'll fade away.

[creditcardfree]

Can we make this thread a sticky?

I agree with Steve to ignore the ones that appear not to be legit.

[Broken Arrow]

Again, CCF beat me to it. I nominate to make this thread sticky.

[creditcardfree]

Oops! boosami, I replied to that other thread and if I had known it was a duplicate I would have never done so. I see these posts are a bit sneaky! I will refrain from future such questions. Again, sorry.

[fe2o3ez]

Thought I would piggy back on the clapping icon...

Nonetheless, it was about time somebody mentioned the annoying posts, and I thank you all for doing so. Although, I hope that for those that read the posts, they take some time and read other posts that demonstrate the harm that can be caused by such "quick fixes". Nothing in life comes (completely) free, and it is through hard work and discipline that people can truly get themselves out of debt.

[april10]

Today, i had to start from some place to get my financial situation clean up and i need a advice.Last couple years i got myself into debt and trying to get out of it while i think my credit score is going down.
here is the my plan and please help me with it.
*first i have to get my credit score from big 3, but they dont include my credit score and they charge fee last time when i did try to get it, so what is the free way to get it?
*Gather all my credit card debt, and interest rates which has been going up even though i have been paying on time and getting letter from them to reduce my credit limit? what is good way to stop it? yes indeed i did call them and ask them nicely to reduce my interest rate, they didnt even try.
*I was thinking to use one of those credit card counselling services to make one monthy payment but here i am reading here that i have tobe really careful with them or not use them at all and what is the debtadvice.org do? anyone try them and how it works, i didnt check them out yet.
*I have been really living on a budget and i am not a big spender but since the recent job cuts and all i m really trying hard, please if you have any advice let me learn, thank you to all

[whitewater30]

Stay away from these. I have heard nothing but horror stories about people who hire these companies and get stiffed on upfront fees with no results. You are better off trying to settle credit card debt on your own.

[cjscully]

It's unfortunate that honest people who are truly trying to provide good and needed service to the public (such as myself) are painted with the same brush as those who seek to rip people off.

Just as there are (a few) honest lawyers and some slimy ones, there are also honest debt settlement providers and credit counselors.

Neither service is right for everyone. There is no such thing as one size fits all. Neither is a magic pill to eliminate your debt painlessly. If someone is sold a service that isn't appropriate for their situation, they will not get the intended result.

Sadly, most of us who provide honest debt settlement services don't spend the ridiculous amounts of money on over-hyped advertising that the more shady operations do, so you've never heard of us.

[thefamilyfinanceguide]

Great post! I would also say if you are trying to get out of debt, get enough income to at least make all the minimum payments, use all extra money to kill the smallest debt first. Basically we need to stop being lazy and if a second job is needed, go get one until the debt is gone. DO NOT INCUR MORE DEBT! It seems that once a credit card is paid off people think we can charge again. STOP IT! Pay in cash. Maybe you need to sell some stuff on eBay or Craiglist, but please work to get rid of your debt. No settelement companies are needed. Work directly with the credit card companies to settle. Get it in writing and SAVE THAT DOCUMENT!

These are great forums, come back here constantly for the good advice.

Sincerely,
The Family Finance Guide

[solvemybadcredit]

To be honest, I know many companies that do actually charge you for the service upfront. I always advise my friends to look into the T&C-s before they sign up. Also self-help is available if you are determined, as well said: you have to set up a debt consolidation plan based on your income and expenditure.

I actually created some spreadsheets for that, if anyone interested, and admin allows I can post them in here for review.

[cjscully]

Originally Posted by solvemybadcredit

To be honest, I know many companies that do actually charge you for the service upfront. I always advise my friends to look into the T&C-s before they sign up. Also self-help is available if you are determined, as well said: you have to set up a debt consolidation plan based on your income and expenditure.

I actually created some spreadsheets for that, if anyone interested, and admin allows I can post them in here for review.

There were many companies that charged upfront fees. However, upfront fees are illegal nationwide as of Oct 27, 2010. This change was part of an amendment to the Telemarketing Sales Rule.

[savelikedave]

I thought you could pretty much settle debts yourself. So long as you let them go past due a few months and you have enough money to pay the settlement amounts. Make sure you get any creditor agreements in writing.

[dbstylee]

don't use either, the effect on credit is the same as if you just stop paying the creditors

[CCCFree]

Ok but you do know that Debt Settelment and Credit counseling are two different things. Debt settlement is basically completely halting all payments to your creditors, and Credit Counseling is having a credit counselor break down your spending habits, suggest a budget and then negotiate with your creditors lower rates and better terms.

[naomibatac]

Yes, I agree with CCCFree, you will need debt settlement if you want to one time settle your account and you need credit counseling if you are not able to manage your credit and finances well. However, you should be wise in choosing the right service provider because there are legit and good ones and there are bogus ones. Be wise and be careful.

[Kairon]

Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. In debt settlement, the consumer makes monthly payments, out of which the debt settlement company takes its fees; the remainder is put into a "trust" or "special purpose" account.