What is a debt settlement company? How do these companies work? How much do they charge? Should I use one to get rid of my credit card debt?
What is a debt settlement company? How do these companies work? How much do they charge? Should I use one to get rid of my credit card debt? Debt settlement companies work as a middleman between you and your creditor. If all goes well (and that’s a big if), you should be able to settle your debts for cents on the dollar. You’ll also pay a fee to the debt settlement company, usually either a percentage of the total debt you have or a percentage of the total amount forgiven. If you’d asked me a few years ago about debt settlement companies, I probably would have told you to avoid them. But things have changed a bit. The Bankruptcy Reform Act of 2005 made it harder for individuals to file bankruptcy, which is always the last resort. Unfortunately, simultaneously consumers racked up so much debt that counseling companies—which are higher up on my list if you need help managing your debt—are sometimes unable to help. So if you fall into this camp, debt settlement may be something ...