Debt Consolidation, Debt Settlement

A variety of different terms can be used, but there seems to be no clear definition.   Some companies are called debt consolidation, but that may simply be taking a new loan to pay off existing debts, resulting in one monthly payment.  Debt settlement/Relief companies propose to negotiate or challenge to reduce the amount owed.  

Typical Problems with Debt Consolidation Companies 

Fees and Costs 

Some group say request details on: expected timeline, total costs, potential impact on your credit score, risk of lawsuits from creditors, and tax implications (settled debt may be taxable).  They submit legitimate companies provide this without pressure.   In practice, like many companies, they paint a rosey picture and the reality may be less.  Few realistically explain the process. 

Go slowly and review writing  

What do you then.  Carefully review disclosure documents.  I've seen consumers quick sign agreement for a variety of purchases.  Even lawyers may need to spend substantial time.  If items are unclear or the writing does not match what was promised, confirm your understanding in writing.  

The Difficulties of Securing Large Reductions

If you pay say 20% of a debt and a 40% reduction is secured, the net amount may not be that much better than if you did the claim on your own.  Debt collection lawyers are tough people, experienced in this area of law, and the benefit of  tricks or strategies can be exaggerated.  

What Does Work 

Sometimes a company providing a law may have violated certain laws or disclosure requirements and their claims can be challenged.  

Accreditation and Licensing

Some suggest checking membership in organizations like the National Foundation for Credit Counseling (NFCC) or the American Association for Debt Resolution.  I am not familiar with them.  Other mention the Better Business Bureau (BBB) for accreditation and here we've seen a number of disreputable companies  nonetheless maintain BBB accreditation or even A ratings so that tends to mean little. 

We will provide a Free Consultation to Discuss a Debt Consolidation Program 

Call (973) 598-1980.