There are many companies that offer various ways to ‘clear‘ debt. Some are legitimate and others are complete scams. Debt settlement, also called debt negotiation or credit settlement is where you try to get the creditor to agree to a ‘settlement’ price at a discounted or reduced balance in order to close the account and stop further collection activity.
While the credit settlement approach will stop further late fees and interest, your credit will take a hit from debt arbitration that results in a reduced settlement even though the creditor agrees to the new terms. Honestly, however, credit rating is not a huge factor for those in the situation requiring this type of extreme action.
Is It Necessary
When you get behind on credit card bills and other debt the credit collectors can be ruthless. Most collection agencies break the law with their attempts to collect debt. If your reason to settle with a creditor rather than pay when you can is simply to get them off your back then you might consider a cease and desist letter. You can stop those harassing phone calls and threats. You can legally forbid them to call you by providing some other form of contact such as email or postal mail. This can give you a break while you get the debt under control. It doesn’t stop them from taking further legal action but it will stop the harassing phone calls.
I have nothing good to say about debt collection departments, especially collection agencies. Never believe a debt collector at their word. Get everything in writing. If it’s not in writing, it didn’t happen. And NEVER NEVER NEVER give them access to your personal or business bank account. NEVER sign an agreement to allow funds to come directly from your bank account and NEVER give your back account number or routing number to a collection agency. These low lives will clean you out.
If it turns out that the only way the debt collector will work with you is to have electronic access to your checking account you can still make the deal. You will need to setup a separate and FREE checking account and only keep enough money in that account to cover the agreed payments. Make sure you have opted out of your bank’s bounce protection and overdraft protection program on this separate bank account so the creditor isn’t overpaid at your expense.
True Clear Debt Solutions
The best clear debt solutions advice I can give when it comes to out of control debt is to get it under control. I know it sounds easier said than done but it is almost always possible. It may not be the easiest clear debt solution but in most cases it is the best solution. I’m a big fan of Dave Ramsey’s Debt Snowball Plan.
If you don’t want to do it alone and need help getting your debt paid down look into a credit counseling service. I recommend you find a nonprofit debt counseling or non-profit debt management program. There is no need to pay someone to pay your bills. This almost always turns out in disaster.