How to prepare for a debt-relief consultation
A debt-relief consultation is the first step to seeking help from a debt-relief company. In this introductory call, you'll learn about the services a company offers and talk through the best options for dealing with your debt.
Follow these tips to prepare and get the most out of a debt-relief consultation.
$7,500
Settlement fee is 15% to 25% of enrolled debt. $9.95 escrow account set-up charge and $9.95 monthly service fee
Not available in Colorado, North Dakota, Oregon, Rhode Island, Vermont, West Virginia, Wisconsin, Wyoming or Washington, D.C.
Freedom Debt Relief has resolved over $19 billion in outstanding debts since 2002. It offers free credit card debt relief consultations.
Before the call with a debt-relief company, put together an overview of your debts. This will help guide your conversation so you have a clear picture of the support you need.
Check your bank account for your debt payments and get a free credit report through an app like Credit Sesame or Credit Karma so you have a full list of your debts. For each debt, note:
Not all debt-relief companies offer reliable service, and the industry is vulnerable to scams. Before you get on a consultation call, prepare these questions to make sure the company is legitimate:
Debt-relief companies focus on negotiating a debt settlement that reduces your balance so you can pay it off in a lump sum or through a payment plan. This may not be the best option for everyone.
During the consultation, you should learn about debt-relief options beyond what the company offers, in case those are a better fit for your situation. Ask how the various options might impact your debt, and be skeptical if a debt consultant is unwilling to provide information about options beyond their services.
Consider these debt-relief options:
Not all debts will qualify for some kind of relief, and you won't know until you've negotiated with creditors. CFPB warns against working with debt-relief companies that guarantee they'll make your debt go away or promise a percentage reduction.
While you're in a debt-relief program, you'll likely set aside money into a dedicated account the company will use toward settlements. In addition to those (usually monthly) payments, creditors can continue to charge your monthly minimum payment, interest and late fees (if you miss payments).
Before talking with a debt-relief company, review your monthly resources to figure out how much you can spare toward debt settlement expenses.
Talk with the representative during your debt consultation about the monthly payments you'll be expected to make. Take time to review how that fits into your financial plan before you commit to a program.
Also note that you usually have to report forgiven debt as taxable income, and your credit score will likely take a hit for any forgiven debt. Make a plan to rebuild your credit after the settlement.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every debt-relief product review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of debt-relief products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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