Does debt relief places w/o bankruptcy ruin your credit...how do they work?
Question:
Debt programs INITIALLY hurts your score, becuase it takes a month or so until all the creditors you owe money to agree in writing to be a part of the program. (meanwhile no payments are being made to your debts..that's why your score takes a hit at first).
Debt Programs work:
An agent from the program contacts all your creditors, negotiates lower interest rates, reduced fees etc on your behalf...and then puts you on an "affordable" monthly pay plan until all amounts are paid to creditors. They also help with living expense budget if needed.
Depending on how much you owe..it could take you a few months-5 years to complete.
During which period you are NOT expected to apply for any new credit. Once the final payment is made, most likely all those acocunts will be closed by the creditors, and you can once again begin building up your score.
(during the payment plan your score will rise slightly because of your regular "on time payments").
The best program out there is called greenpath.com. They are registered with the Gov't as debt counsellors; and they are non-profit. (small monthly fee to particiapte) Good luck.
Hi, I would absolutely not use a debt relief company if at all possible. I was in need of financial help a few years back and joined a debt relief company in the New England area. The way this company worked is that you forwarded all credit card bills to them. Meaning, you would no longer receive a monthly statement. I paid around 500 to join this company. They promised to lower my interest rates with each card, meanwhile I paid around 600 a month to this company. The accounts were never paid because this company held the money until there was enough to pay one card at a time. In the end, I cancelled my services with them and did manage to get a little money back and eventually filed bankruptcy. It has been 2 years since I filed, and my credit score is over 700. Which is the best it's ever been. If at all I would advise you to file if possible. Everyone deserves a 2nd start, and I have definitely learned my lesson. Hope this helps you.
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