"Debt Relief Of America"; does it work?

Question:

I've heard about these guys on the net and on the radio. If you have over $10K in debt, they settle with your creditors for a lower amount. Has anyone tried them? Can it put you in worse financial shape than if you try to pay off your debts on your own?

Answer:
If your accounts are all in collections, then settlement might be a good idea. But you can do this on your own. Debt settlement companies charge you an upfront fee, monthly fees and a percentage of what they "save" you. Plus, if the savings are over $600, then they report to the IRS your forgiven debt as a form of taxable income.

You are much better off doing this yourself if you want to settle. If your accounts are still with the original creditors, then credit counseling will help you clear them up and rebuild your credit.

I used Consolidated Credit Counseling, it's a non-profit that gets its funding from the credit card companies. I have heard that in some instances people have been asked to pay a fee for the services but I didn't encounter this with CCC. They got all but 1 interest rate lowered! I will pay off the last $$ later this year.

"Debt Relief Of America"; does it work?

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