How Do Debt Settlement Companies Work?

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Debt settlement companies are actually formed by credit card companies in an effort to get some money paid down on a debt. Understand that many debt settlement companies charge a fee that does not go towards the debt with insight from a registered financial consultant in this free video on debt settlement.

Part of the Video Series: Personal Finances & Money Management
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Video Transcript

Our next question today is how do debt settlement companies work? This is financial adviser Patrick Munro. Debt settlement companies in fact are the credit card companies themselves. There are various companies that have company names that are on a contract basis with the credit card companies. Credit card company realizes that if you don't pay a credit card balance, there's no return on that portfolio so therefore they created this debt settlement companies that offer a solution to debt settlement. What it is is just a way for the company to get something out of you going forward. Either way your credit will be in a bad way if you retain these individuals. They pay upfront fees, some of the ones that are untrustworthy will charge you an upfront fee as well which takes care of their company before the credit card company. In a word you want to stay away from debt settlement companies. Anything that sounds too good to be true, is, more often than not. They make wild claims saying that they're going to tell you secrets that the credit card companies do not want you to know. Everything that a credit card company has is in your card holder agreement. If you read it, that's the way it is and ultimately the credit card company can change their mind about the card holder agreement. So that is how debt settlement companies work. This is financial adviser Patrick Munro.


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