Can I Settle My Credit Card Debts Myself or Should I Stay in the Debt Settlement Program?

Debt settlement programs produce mixed results and may not be your best option.

Debt settlement programs produce mixed results and may not be your best option.

A debt settler’s promise to save you from financial ruin is tempting, but comes at a cost -- one that may be worth it for some, but not others. Debt settlement is a highly contentious practice and often causes more harm than good. If you are involved in a debt settlement program, investigate all of your options to determine if it is right for you. If you want to leave your debt settlement program, there are numerous resources that can help.

Validating Relief

Are you reaping any tangible benefits by using a debt settlement program or are you being driven deeper in debt? Debt settlement companies often make promises they cannot keep and levy heavy fees. Because debt settlement companies often do not represent the best interest of consumers, the attorney generals in many states have cautioned consumers about using debt settlement companies. On the other hand, some companies do successfully alleviate credit burden by eliminating interest and credit card fees. If you cannot point to any measurable ways the debt settlement program has reduced your financial burdens, explore other options.

Learning the Terms

Make sure you have a thorough understanding of how the debt settlement program works. Your credit cards must become delinquent before your creditors will give you any substantial discounts. This can have a severe effect on your credit ratings. Also discuss the extent and frequency of any associated fees. Some companies withhold your first several payments into the program as non-refundable service fees. If this is the case, it may be better to repay those sums directly to the credit card company rather than a debt settlement company.

Consulting Third Parties

If you are worried that your debt settlement company may be a scam, check the Better Business Bureau website. You can find any complaints about the company and if they have been, or are, involved in any litigation. Also contact a counselor at National Foundation for Credit Counseling, NFCC. The organization can help you explore your options and determine if staying in a debt settlement program is right for you. While NFCC is a reputable credit counseling service, others may not be, so do your research and make sure they too are not making false representations.

Working with Creditors

Contact your credit card company directly. You do not need a debt settlement company to negotiate a modified payment plan. You can do so on your own behalf. Moreover, some credit card companies already have programs in place that help individuals struggling to pay off their credit cards.

Weighing the Pros and Cons

Debt settlement companies are not all bad. But while a debt settlement program can help you reduce your debt, and eliminate interest rates and fees attached to your credit card balance, it comes at a price. Before determining whether to abandon your debt settlement program, do your homework. If your debt settlement company has positively contributed to your financial situation, stick it out, but continue to be vigilant. If, on the other hand, your debt settlement company has a tattered legal past, notoriously provides misinformation and exacts heavy fees, it is probably in your best interest to purse other avenues.


About the Author

Bri James has been writing professionally since 2011. As a prize-winning cook, self-proclaimed humorist and enthusiast for all things delicious, she brings her foremost loves to life through food writing. James holds a Juris Doctor from Duke University and a Bachelor of Arts in political science from Emory University.

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