How Debt Settlement Works

The nonprofit Consumer Credit Counseling Service of Orange County produced an excellent video on how debt settlement works — usually against you.

We’ve written on this topic several times on our blog as well.

If you decide to hire someone to help you settle, consolidate or otherwise manage your debts, then be very wary of companies that are advertising. Most of them draft various fees from your checking account and provide absolutely no services, and most of them are actually owned and operated by credit card companies!

At a minimum, consult an agency that is non-profit, and in good standing with the Better Business Bureau, and a member of the National Foundation for Credit Counseling.  We suggest Consumer Credit Counseling Services which meets each of these criteria.

People want to do the “right thing” by paying their debts to the best of their abilities, but creditors have no incentive to tell them that making partial payments can have a worse effect on a credit score than a bankruptcy.

This is where a credit card debt counseling session with a qualified bankruptcy attorney comes in.