Credit card debt settlement companies offer a debt management service for consumers and businesses. The companies can act on your behalf, contacting the companies where you have debt, negotiate for reductions in interest when the debt is a credit card account and reduce a number of debts to a single monthly payment for you. For providing this service, they charge a management fee.
Debt management companies can be helpful for those people who do not have the time, the inclination or the smarts to deal with the debt collectors themselves. Some people fear the kind of conversations they would have and want to avoid that at all costs. In which case, passing your debts over to a settlement company might be a useful, if costly, solution to consider.
For some debts, namely credit card accounts, it might be possible to get a discount on past interest but the debt companies are not guaranteed to get you any reductions. They will charge you a management fee which can be substantial when compared to your level of indebtedness.
Where debt management companies can be useful is in having connections and contacts in various finance companies. They can get to talk to the key decision makers and not necessarily the first person who answers the telephone at Customer Services. This may be farther than you would have managed to have done yourself and could have some bearing during negotiation. You will have to determine what this is worth however.
Any debt settlement will be classified on your credit report as a settled debt, not paid in full. This will knock down your FICO score and anyone pulling your credit file will be able to see this information.
Credit card debt settlement companies come in all shapes and sizes, some honest, some less so, so it is important to do a little research in your own time. Don’t take the first tempting offer you receive.