topic Re: Debt relief companies in Personal Finance

Debt relief companies

bigpoppa1 — Thu, 29 Feb 2024 21:43:11 GMT

Are debt relief companies a reasonable option even if they require you to intentionally miss your credit card payments causing your credit card accounts to go into default?

Companies like National Debt Relief say they can relieve debt, but what they really do is just cause your credit cards to go into default, and then negotiate with the creditor for a lower payoff.

Re: Debt relief companies

JoeRockhead — Fri, 01 Mar 2024 10:00:57 GMT

The short answer for me is no... If all attempts to keep up go south and I'm going to default anyway all on my own, and BK wasn't an option, then I could also negotiate all on my own as well, and... not pay someone to help me ruin my credit.

Re: Debt relief companies

Slabenstein — Thu, 29 Feb 2024 22:27:19 GMT

I would say they're probably not a reasonable option since, basically, you're just paying them to free up the time you would have spent doing it yourself. If you have the money to spend on that kind of thing, like deciding to pay extra for Instacart rather than doing your grocery shopping yourself, then I think it can be reasonable to pay to have a little more time for something else, depending on your goals. But if you're in a position where you're considering hiring a debt relief company, then you don't have the extra money and should probably spend your time instead if your goal is to get out of debt.

ETA: Another consideration is that, for some lenders, a debt management company won't be able to negotiate a settlement for you, because some lenders won't work with them. So for those lenders you'd be paying the DMC and still having to spend your time anyway.

Re: Debt relief companies

SouthJamaica — Thu, 29 Feb 2024 22:55:24 GMT

@bigpoppa1 wrote:
Are debt relief companies a reasonable option even if they require you to intentionally miss your credit card payments causing your credit card accounts to go into default?

Companies like National Debt Relief say they can relieve debt, but what they really do is just cause your credit cards to go into default, and then negotiate with the creditor for a lower payoff.

I would never go near anything like that.

Re: Debt relief companies

pizzadude — Thu, 29 Feb 2024 23:20:47 GMT

My main beef with these types of companies is that they don't advertise or acknowledge that you're wrecking your credit in order to obtain the "debt relief".

Re: Debt relief companies

Linnaea — Fri, 01 Mar 2024 13:40:46 GMT

I did this and in the long run. I paid much more. Discover, Amex, big credit unions don't generally negotiate for less. They don't tell you this up front. You are told to let your bills go late so you default. All that interest keeps tallying. Then there fees on top your paying apx the same and sometimes more. Plus if less then the inflated rolled interest you have to pay on the difference in taxes. I regret it. They told me 2 years ... but they were still negotiating in 4th year. I still have 2 badies that wouldn't negotiate still on my credit report. I paid more than I owed Amex and Discover. I ENDED up making them whole and then some cause of the late fees. I wish I did bankruptcy or probably non profit credit counseling. Or if at the time I wasn't a scary cat I should of did myself.

Re: Debt relief companies

Anonymous — Tue, 05 Mar 2024 04:13:58 GMT

Don't go through one of these companies. As others have said, they will harm you both credit wise and financially. I would consider a Debt Management Plan administered by a non-profit NFCC affiliated Credit Counseling Organization. Your creditors will work with these programs, and a DMP will not ask you to stop paying your creditors. These plans work by reducing interest rates, allowing you to pay off your debt quicker, saving money in the process. You can find a reputable Credit Counseling Organization through nfcc.org.

Best of luck to you.

Re: Debt relief companies

CorpCrMgr1 — Tue, 05 Mar 2024 19:19:16 GMT

What do these companies gain in fixing your credit? Nothing. Once fixed you no longer pay. Others have stated you can do what a debt relief company can do. Go to your USPO, get a lot of certified/return receipt cards. Good luck!

Re: Debt relief companies

DebtNavigator — Fri, 21 Feb 2025 22:22:05 GMT

A lot of people misunderstand how debt relief works, so let’s clear up some common myths.

Myth 1: Debt relief companies make you stop paying. No legit company forces you to stop paying. Creditors typically won’t negotiate unless you’re having trouble. If you’re current and can afford your payments, debt relief isn’t the right fit. Most people who turn to debt relief are already behind. The program doesn’t cause default, it’s already happening.

Myth 2: Debt relief companies charge fees for something you could do yourself. It’s true that you can negotiate settlements on your own. But not everyone has the time, patience, or skill to deal with creditors. Some won’t even talk to individuals. A good debt relief company manages all the details. It handles paperwork and ensures that it finalizes settlements correctly. Yes, there’s a fee, but it’s like hiring a professional for any other service. You’re paying for expertise and convenience.

Myth 3: All debt relief companies are the same. Not even close. Some are pushy and aggressive. Some are upfront about the process. Your credit may take a hit. Also, you might get collection calls or face lawsuits. The difference is that some companies help you prepare for that. Freedom, for example, offers legal support as part of its program.

Myth 4: Debt relief companies tank your credit. Debt relief itself doesn’t show up on your credit report. What actually lowers your score is missed payments and high credit utilization. If you're behind or at your limit, your credit will drop. This happens whether you join a program, negotiate yourself, or take no action.

One thing that’s not a myth: there’s no one-size-fits-all solution. If you’re considering debt relief, do your homework. The best debt relief companies will answer your questions honestly and make sure the program is a good fit for you.

Re: Debt relief companies

Realist — Sat, 22 Feb 2025 12:22:17 GMT

1. Make sure you have enough debt in which you want to pursue in this end of the road path, the last line in the sand avenue.

2. Most debt settlement or relief companies will negotiate to lower your interest with debt holder. This does not mean you may climb out of that debt. You may still be too far gone to go this route, even with a reduced percentage.

3. Upon realizing you aren't getting anywhere with step 2, it's time to consider debt settlement. This requires you to miss payments, to acquire the balance for payoff in the form of settled in full. This isn't an issue as to even get this far, requires you to initiate default with a lender to begin with. Now, you have some leverage after "x" amount of payment default.

4. Debt settlement company and you reach an agreement. Provide a plan. Settle a few debts. Then magically, you find that one or two lenders do NOT negotiate with debt settlement companies. So you man/woman up, and settle the debt for pennies on the dollar. You fire the settlement company (or no longer do business with) and settle all your debts going forward.

5. After all debts are settled, your credit score likely jumps into the 6xx range, because with the amount you've settled, that offsets the weight of the debt itself, along with the "settled in full" status. In seven years, it falls off your report, and your score shoots even higher.

6. Any difference settled, becomes income on the end of year tax report. That's the way it works. You are paying something one way or another.

Caveat 1: Rock and hard place. Best utilized when the economy sucks, and you are out of work.

Caveat 2: Still subject to deficiency judgement, which makes caveat 1 conditions more powerful. You can't bleed a rock. 2008 taught the world a grand lesson.

Re: Debt relief companies

Kolin — Fri, 28 Feb 2025 18:12:13 GMT

Debt relief companies often use aggressive tactics like forcing accounts into default to negotiate settlements. While this can reduce total debt, it severely damages credit scores and can lead to legal action from creditors. Some people explore personal loans as an alternative to consolidate debt without tanking their credit. It really depends on the situation—have you looked into lower-interest refinancing options?