Being saddled with unmanageable debt is no fun for anyone. There seem to be so many ways to get into debt but so few ways to get out of it. The good news is that there is help available, you just need to know where to look. Chances are you’ve searched for ways to get out of debt and have been met with countless search results detailing help available, with one method being credit card debt relief companies. If you’re interested in finding out more about these companies and how they work with consumers to pay off their debt, keep reading on.
What are Credit Card Debt Relief Companies?
Credit card debt relief companies, also known as debt settlement agencies or companies, are businesses designed to help people struggling with debt. They are for-profit companies that charge you for negotiating with creditors on your behalf to save you money by settling for a debt that’s less than what you originally owed.
While having a company negotiate for a settlement on your behalf sounds great, it’s important to understand that there are other factors involved. For example, debt relief companies may negotiate a great settlement with your creditors, but then require a large chunk of the overall debt as payment for their services. If you decide to utilize a credit card debt relief company, it’s important that you understand all fees involved before committing.
How Do Credit Card Debt Relief Companies Work?
These firms will oftentimes recommend that instead of paying creditors directly, you put that monthly payment into a savings account that they set up for you. The idea is that you have a percentage of the debt ready to pay off before they pursue settlement options on your behalf.
The process of debt relief, however, can cause temporary credit issues. Your scores will rebound once your debts have been paid and you begin rebuilding your credit. And face it; your scores haven’t been great in some time. Also, if you were struggling with your monthly payments before, it can be scary to commit to another company for an extended period.
Once the required amount of money has been paid into the designated account, debt relief companies will then negotiate on your behalf with creditors to lower the overall debt you owe. While you can try to pursue this avenue yourself, it is helpful to have an expert on your side that is used to dealing with difficult creditors. They know the right things to say and how to get the best settlement possible. There’s a reason people continue to use these types of companies!
How to Find an Agency You Can Trust
If you decide to use a credit card debt relief company, it’s important to do your research and avoid potential scams. Common types of scams are companies that guarantee to settle all your debts for a certain percentage that you owe. Most reputable companies are honest in the fact that they cannot guarantee a result, as negotiations are never a sure thing.
It’s also important to avoid companies that charge fees before they have settled any of your debts. This is a practice that’s forbidden under the FTC’s Telemarketing Sales Rule and can leave you much worse off than you were before.
Companies like Freedom Debt Relief have trusted debt relief agencies that won’t charge you any fees before a settlement has been reached. They can help with certain types of debt including credit card, medical, personal loan, and department store debt.
They are not able to help reach settlements for federal student loan debt, auto loans, taxes, or lawsuits. If you’re wondering whether they are right for you, they offer a consultation completely free of charge.
When you don’t have to commit right off the bat, this is a good sign of a reputable company.