Debt Settlement

Hi,

So we have been snowballing our debt for the past few months and it's going great but I was just wondering if anyone has looked in to or used a Debt Settlement company?

Do they settle with the company for a lower amount than your actual balance?

Is it a low/no interest rate?

Does it negatively affect your credit score?

Are there hidden fees that I should know about?

Thanks for any help!

Debt Settlement

Is it for defaulted debts or are you current?

For defaulted debts, yes, there are issues. Many. One, they will report that the account was settled for less than owed on your credit, and it could update your date of last activity, keeping the account on your credit for longer. Collection agencies are also known to sell off the remaining balance and often do not send a letter stating that they consider your settlement as payment in full. And when they do, they often word it in a way that still allows them to sell the remaining portion and allows another agency to collect. And, another agency may not CARE that you settled and will still come after you for the balance. You're also paying them to do negotiations that you could probably do yourself.

For a current debt, then they would likely have to let the account go into default before they would be able to settle anything. That would definitely negatively impact your credit. You don't want your debts going into a collection agency and a bank isn't going to settle with you for less than you owe if you're already paying in most cases. If they're still with the credit issuer, then deal with them directly yourself. They may have a hardship program that you can enter temporarily.

Re: Debt Settlement

Thanks for your reply.

This debt is all current. We have never paid late.

I am just looking for a way to consolidate..are those two different things? Maybe I'm getting the two confused? If you consolidate, would that negatively impact your credit?

Basically what I am trying to do is get out of debt as quickly as possible. I really don't want any debt hanging over our heads.

Debt Settlement

If your credit is good, you could look into a consolidation loan or a zero interest/low interest card to xfer the balances to in order to have one large payment that you could put extra towards. In a consolidation loan, the interest is sometimes lower and you may be able to pay it off faster. Credit unions are usually good about having loans that can be used for that

Possilby were you thinking of consumer counseling? Those do tend to hurt your credit because many creidtors view them as a pre bankruptcy thing.