Please clarify what you mean by “debt relief.”
STAY AWAY from any “debt relief” program that involves debt settlement. Debt settlement is a risky tactic where you pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.
If you are talking about credit counseling debt management programs, make sure the company is a NFCC member: . These are legit, non-profit credit counseling companies. They offer debt management programs for a nominal fee. They don’t negotiate settlement. They negotiate lower interest rates and payment so you can pay off the debt.
While in a debt management program, it is noted on your credit report and will affect it just about like chapter 13 bankruptcy. However, upon completion of the program, the notation is removed and you will have decent credit — unlike chapter 13 bankruptcy which will stay for 7 years.
Nowadays, the debt relief industry is growing in leaps and bounds. Millions of Americans have debt issues – or are over their heads with credit card debt, which is why they seek out credit card debt relief agencies. These people will help negotiate lower interest rates in exchange for a regular monthly payment. In many cases, you’ll send your money to the credit card debt relief agency and they will disburse it to your creditors. It is not as bad as bankruptcy but it i will reduce you credit score.
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September 8th, 2009 at 3:37 pm
No, it’s not as bad as a bankruptcy, but it will definitely ding your score. After 7 years, you can have debt relief notations removed from your record. Bankruptcy stays for 10 years. Please make sure you are dealing with a reputable company.