Latest news with #debtreliefcompanies
CBS News
5 days ago
- Business
- CBS News
How to prepare for a debt relief program: 4 steps to take
While carrying high amounts of debt is rarely ideal, this issue isn't always the result of reckless spending. For many Americans, it's caused by the fallout of rising living costs, medical emergencies, job loss or simply trying (and failing) to keep up with the payments on high-rate credit cards. After all, as those balances grow and the compound interest piles up, what once felt manageable can quickly spiral into an overwhelming problem. That's where debt relief programs can be key. These services, which are offered by debt relief companies, aim to reduce, restructure or consolidate what you owe, making it easier to get back on your feet. And with credit card interest rates still hovering near record highs right now, more borrowers are turning to their debt relief options to find breathing room and a path forward. But signing up for debt relief isn't just about making a call or filling out a form and hoping for the best. To get the most out of the process (and avoid costly missteps), you need to take a few steps to prepare. Learn more about your debt relief options here. If you're thinking about enrolling in a debt relief program, here are a few steps you should take to get ready before committing: The first and perhaps most essential step to take before enrolling in a debt relief program is to review all of your debts and create a list or spreadsheet outlining exactly what you owe. That includes not just the total balances on your loans, medical bills, credit cards, buy now, pay later loans and other types of debt, but also the interest rates, due dates and minimum payments for each account. This exercise serves a few purposes. For one, it helps you determine whether you're a good candidate for debt relief. Most programs are designed to help with unsecured debt, like credit cards or medical bills, not secured loans like auto loans or mortgages. It also helps you and your debt relief provider identify which accounts to target and determine how much you might realistically save. You also need to thoroughly review the income sources that you can use to help fund the dedicated bank account where you'll deposit money for the debt relief company. Debt settlement only works if you can consistently make your program deposits and have money in that account available to pay the settlements. It's equally important to understand the financial obligations you have in addition to your debts so you have an accurate estimate of how much money you can put into your dedicated account. Make sure to include expenses like utility bills, childcare, groceries, transportation and other recurring costs. Find out how to start the debt relief process today. Debt relief isn't a universal solution, and each program type comes with trade-offs. Pursuing debt settlement can reduce the amount you owe, for example, but it may damage your credit in the short term. Debt consolidation, on the other hand, can simplify your payments and lower your interest rate, but it often requires good credit to qualify. So, before moving forward, take the time to learn how each approach could impact your finances, from your monthly payments to your tax burden and your credit profile. A reputable debt relief provider can walk you through the pros and cons of each option, but it's also wise to do your own research ahead of time. That way, you're not caught off guard by fees, credit score drops or tax liabilities on forgiven debt. Debt relief programs require you to make regular payments, whether you're contributing to a settlement fund or repaying a debt consolidation loan, so it's crucial to understand how much you can comfortably afford each month. Start by reviewing your income, fixed expenses (like rent and utilities) and variable costs (like groceries and gas), and then cut any unnecessary spending and redirect that money toward your debt. Having a realistic budget in place before starting a program can prevent missed payments and keep you on track. If you're planning to start a debt relief program, it's time to stop using your credit cards and avoid applying for new ones. Most programs require you to close or stop using your credit accounts, and continuing to rack up new debt could disqualify you or derail your progress. So, focus on living within your means and using only cash or debit instead. This may feel like a tough transition, but it's a necessary mindset shift, one that can help you maintain financial stability long after the program ends. Debt relief can offer a powerful way to regain control of your finances, but preparation is an important part of the process. By reviewing your debts, checking your credit, setting a budget and changing your approach to using credit, you'll be setting yourself up for a smoother experience. Whether you're just exploring your options or are ready to enroll, these steps can help you approach the debt relief process with confidence.
CBS News
5 days ago
- Business
- CBS News
Should you try to negotiate credit card debt relief on your own? 3 things to know first
High-rate credit card debt has become a crushing reality for millions of Americans, who added a collective $27 billion to their credit card balances in the second quarter of 2025. The total amount of credit card debt is now sitting at a record-high of $1.21 trillion nationwide, while the average credit card rate is closing in on 22%. As a result, what may have once been manageable debt has become a big issue for many cardholders. And, as the cost of living continues to rise, those trapped in this cycle of debt may have an even harder time finding their way out. When the weight of credit card debt becomes too heavy, the instinct is often to seek help from a debt relief company. These companies often claim they can help you slash your balances by 30% to 50% or more, and the appeal of that is understandable. After all, who wouldn't want someone else to deal with their debt issues while potentially saving thousands of dollars on what they owe? However, there's another option that many people overlook: negotiating directly with your creditors instead. But while going the DIY route can be appealing, there are a few important factors that you'll want to fully understand before making your first call. Find out how to get help with your high-rate credit card debt today. Negotiating debt relief on your own has some clear benefits. You can avoid the fees that professional debt relief companies charge and you stay in direct control of the negotiations. You also eliminate the risk of working with a disreputable company, which is a concern in the debt relief space. Still, creditor negotiations can be complex and high-stakes, so you'll want to consider these factors first, which can make or break your efforts: Debt negotiation involves repeated, often stressful conversations about your financial issues, and your creditors may not agree to your first offer, or your second, either. Successful negotiations can take multiple calls, letters and follow-ups, and you'll need to be ready with documentation that supports your financial hardship, such as proof of income loss, medical bills or other major expenses. You'll also need to have a realistic settlement amount in mind. Creditors are more likely to agree if you can offer a lump-sum payment that's significantly higher than what they might recover through collections, but lower than your total balance. And if they counteroffer, you'll need to decide quickly whether to accept, reject or push for better terms. That can get tricky without help from the experts, but it may be possible to navigate if you do your research first. Learn more about the benefits of working with a debt relief company now. Successful debt negotiation requires understanding complex legal and financial concepts that most people haven't encountered before. You need to know your rights under the Fair Debt Collection Practices Act, understand when debts can be legally pursued and recognize valid settlement offers versus potentially harmful agreements. There are also critical timing considerations, like knowing when to negotiate and when certain debts might be approaching the statute of limitations. That can make it tough to navigate on your own, which is why some borrowers opt to work with a debt relief specialist who understands these nuances and has established relationships with major creditors. These experts know which companies are more likely to settle, what offers are typically accepted and how to structure agreements to protect your interests. They can also identify red flags you might miss, such as agreements that don't properly close accounts. A debt settlement can create ripple effects beyond the immediate savings. If $600 or more of your debt is forgiven, it may count as taxable income. Without proper planning, you could face an unexpected tax bill that eats into your savings. And depending on how your settlement is reported to the credit bureaus, it could also impact your ability to borrow in the future. Those repercussions can be difficult to avoid, so for some borrowers, it's worth the extra costs to use a debt relief company during the process instead. Doing so can help you understand these downstream effects and how to best handle them. The right expert can also help you coordinate with a tax professional if needed, explain how a settlement will impact your credit and, in some cases, help you take steps to minimize the damage. Negotiating credit card debt relief on your own can save you money on fees and give you more control over the process, but it's not without its challenges. You'll need to be prepared for potential credit score impacts, a lengthy and sometimes frustrating negotiation process and possible tax consequences down the road. If you have the time, knowledge and persistence to make a strong case, though, DIY debt relief could be a viable option. But if you're unsure about handling the process or navigating the potential pitfalls, it may be worth at least consulting a reputable debt relief service to help you make the most informed decision.
CBS News
22-07-2025
- Business
- CBS News
10 signs of a reputable debt relief company
When the debts you owe start controlling your life instead of the other way around, debt relief companies suddenly seem like they're everywhere, promising quick fixes and financial freedom. Their ads fill your inbox, pop up on social media and flood radio waves with testimonials that sound too good to be true. And often, they are. The reality is that the debt relief industry attracts both genuine helpers and outright scammers. While legitimate companies can provide real assistance to those drowning in debt, other firms prey on desperation and financial stress. These bad actors will gladly take your money while making your situation worse. The key to getting actual help lies in knowing how to separate the professionals from the others. But what exactly should you look for when trying to find a reputable debt relief company? Learn how the right debt relief strategy could benefit you today. Here's exactly what to look for when evaluating your options: A legitimate debt relief company will never demand payment before they have helped you settle at least one of your debts. Under federal law, debt relief companies cannot charge you any settlement fees until they've done so, and reputable companies understand this rule and structure their payment systems accordingly. This performance-based model ensures that the company has a genuine incentive to help you achieve results. Explore your debt relief options and discover the right strategy for you now. A reputable debt relief company will explain the fee structure up front, in plain English. They'll tell you exactly what you'll pay, when you'll pay it and what services you'll receive for that money. Legitimate companies typically charge a percentage of your enrolled debt, so be wary of companies that are vague about costs or have complex fee structures that seem designed to confuse rather than inform. Legitimate debt relief companies typically offer free consultations where they review your financial situation and explain your options. During this consultation, they should ask detailed questions about your debts, income and expenses to determine whether their services are appropriate for your situation. A reputable company will also discuss alternatives to their services, such as credit counseling, debt consolidation or even bankruptcy if that might be a better option for you. They're not just trying to sell you their services; they're trying to help you find the best solution for your specific circumstances. Reputable debt relief companies are properly licensed in the states where they operate and maintain memberships with recognized industry organizations. Don't just take their word for it, though. Do your own research to confirm their credentials before signing up. You can verify a company's licensing status by checking with your state's attorney general's office or department of consumer affairs. Established, reputable debt relief companies have years of experience and can provide evidence of their success. They should be able to share statistics about their settlement rates, average savings for clients and typical timeframes for completing the debt relief process. So, look for companies with positive reviews from multiple sources, including independent review sites, the Better Business Bureau and consumer protection agencies. Be cautious of companies that only have reviews on their website or that have numerous complaints about failed promises or poor customer service. Legitimate debt relief companies are honest about how long the process takes and what you can realistically expect to achieve. They won't promise unrealistic results like eliminating all your debt in a few months or reducing everything you owe by 90%. They should explain that debt settlement can take two to four years to complete, that not all creditors will agree to settle and that the process can have negative impacts on your credit score. This might not be what you want to hear, but it's essential for making an informed decision. Reputable companies will thoroughly explain the risks associated with debt relief, including the potential impact on your credit score, the possibility of being sued by creditors for nonpayment and the tax implications of forgiven debt. They want you to understand exactly what you're getting into before you commit. They should also explain that debt settlement isn't appropriate for everyone and discuss situations where other options might be better suited to your needs. Legitimate debt relief companies strive to maintain regular communication with their clients throughout the process. They should provide you with regular updates on the status of your accounts, negotiations with creditors and any changes to your settlement plan. You should be able to reach your assigned representative or customer service team when you have questions or concerns. Companies that are difficult to reach or that don't return calls promptly are red flags. Some debt relief firms even provide their customers with ongoing access to legal services in case a creditor gets its lawyers involved. While most debt relief companies charge an extra fee for legal services, a small number include legal services in the cost of their program. Reputable companies take the security of your personal and financial information seriously. Any debt relief company you consider should have a clear privacy policy that explains how they collect, use and protect your data. This policy should be easily accessible on their website and provided to you in writing. So, you should be cautious of companies that ask for sensitive information before you've signed a formal agreement with them. Many reputable debt relief companies offer some form of money-back guarantee or satisfaction guarantee. This might include a full refund if they can't settle any of your debts within a certain timeframe or a partial refund if you're not satisfied with their services. While the specific terms of these guarantees will vary, the willingness to offer them demonstrates confidence in their ability to deliver results and provides you with some protection if things don't work out as expected. Choosing a debt relief company is a significant decision that can have lasting impacts on your financial future. While there are disreputable companies in this industry, legitimate organizations do exist and can provide valuable assistance when you're struggling with overwhelming debt. So, be sure to do your research and keep an eye out for the signs that a company is doing its best to be transparent about the process, fees and solutions it offers. That way, you can ensure that you're making the best decision possible for your finances.
CBS News
30-06-2025
- Business
- CBS News
Best debt relief companies, plus advice borrowers need to know now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. It can take work to find the best debt relief company for your needs, but doing so could also pay off. Getty Images/iStockphoto As of mid-2025, Americans are carrying record levels of consumer debt — and if the rising debt levels weren't concerning enough, they're carrying this debt at a time when interest rates remain high overall. Credit card debt can be particularly problematic now, though, as rates on these short-term borrowing tools are currently hovering near historic highs. With credit card interest charges compounding at today's high rates, many cardholders are finding it difficult to make even the minimum monthly payments. In turn, more borrowers have been looking to debt relief as a way to regain control. Debt relief companies typically offer a range of solutions for your high-rate, unsecured debt, including debt forgiveness, also known as debt settlement. With this type of debt relief, the company's experts try to negotiate with your creditors to settle your debt for less than what you owe. While that has its risks, including potential credit score damage and tax implications, debt settlement can offer a lifeline for people struggling to stay afloat financially. But not all companies are created equal. Some offer unique types of support and strong customer service, while others may come with hidden fees or questionable practices. So, knowing which companies are trustworthy and fully understanding how debt relief works is crucial before signing up. Find out how to start tackling your expensive debt problems now. Best debt relief companies, plus advice borrowers need to know now Here's a look at the top debt relief providers across several different categories to help you find one that aligns with your needs: Best for customer satisfaction: Accredited Debt Relief Accredited stands out for having the strongest customer satisfaction ratings among its peers. Their program includes account setup, budget review and personalized settlement negotiation, and the company boasts an A+ rating with the Better Business Bureau (BBB), as well as a low number of complaints. It also has a high rating on Trustpilot, indicating that customers are, in large part, highly satisfied with the help they've received from this company, and it has widespread availability as it operates in most states. Learn more about Accredited Debt Relief here. Best for legal assistance: Freedom Debt Relief One of the biggest fears people have when entering into a debt settlement program is the prospect of being sued by their creditors. While many debt relief companies offer ancillary legal assistance to help customers deal with creditors, this protection and peace of mind generally comes at a cost on top of the other charges. Freedom Debt Relief is unique, though, in that it offers all customers legal assistance for no additional charge. The company also has a lower minimum threshold than some competitors, requiring only $7,500 of unsecured debt to enroll. Learn more about Freedom Debt Relief here. Best for pricing transparency: DebtBlue The debt relief industry doesn't exactly have a reputation for transparency, which can make it tough to navigate. However, DebtBlue is the exception to that rule, with an informative website that explains both the process and its costs in plain English. The company proactively discloses third-party account fees and provides detailed explanations of all costs involved. DebtBlue also maintains strong ratings on review sites and offers individualized responses to customer complaints. Best for quick debt resolution: New Era Debt Solutions New Era Debt Solutions has a higher debt minimum than many other debt relief companies, but it also has decades of experience helping people settle their unsecured debts for less. The company requires a minimum of $10,000 in debt to enroll, but New Era clients take an average of just under 28 months to complete the debt settlement program, which is significantly faster than the average timeline with many of its competitors. And its fees are about as good as it gets, with a high end of 23%. The company also operates in nearly every state except for Iowa, Maine and Oregon. Find out more about New Era Debt Solutions now. Best for overall value: Pacific Debt Relief Founded in 2002, Pacific Debt Relief is one of the oldest companies on our list, but what sets Pacific it apart is its unique fee structure. Unlike other companies, the fees with Pacific Debt Relief are performance-based and calculated on a percentage of settled debt rather than the original enrolled amount, potentially saving clients money. The company's fees range between 15% to 25% and it requires a minimum of $10,000 in debt, though it may accept clients with as little as $7,500 in some circumstances. Debt relief advice to know now Before you make any decisions on how to deal with your debt, it may help to consider the following: Today's high rates mean you should act quickly. Carrying a credit card balance can quickly become costly at today's rates. If you're falling behind Carrying a credit card balance can quickly become costly at today's rates. If you're It's important to do your homework. Some debt relief companies put you at risk with their predatory practices, so you'll need to vet your options carefully Some debt relief companies put you at risk with their predatory practices, so you'll need to Not all debts will qualify for debt relief. Debt relief programs only address unsecured debts like credit cards and personal loans. Auto loans, mortgages, student loans and tax debts may require specialized solutions or a bankruptcy route Debt relief programs only address unsecured debts like credit cards and personal loans. Auto loans, mortgages, student loans and tax debts may require specialized solutions or There could still be a credit impact. If you're going to pursue debt relief, you should brace for a potential hit to your credit score If you're going to pursue debt relief, you should brace for a potential hit to You could owe taxes on any settled debt. The IRS considers forgiven debt as taxable income The IRS considers forgiven debt It makes sense to consider the alternatives. You may have more options than you think for resolving your debt. For example, if your credit is intact, a debt consolidation loan credit counseling program The bottom line Debt relief can provide significant financial relief to borrowers who are overwhelmed by their unsecured debt, but it's important to do your research and find the right companies to work with. The best debt relief companies offer transparent pricing, strong customer support and proven track records of successful negotiations. You should also consider the possible downsides of pursuing this type of relief. While it can provide significant savings, it won't be the right move for everyone, so make sure you're also weighing the less damaging alternatives, like debt consolidation or credit counseling, before committing to any solution.
CBS News
13-06-2025
- Business
- CBS News
What debt relief companies can (and can't do) for your credit card debt
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. There can be a lot of benefits to pursuing debt relief, but the process has its limitations, too. Getty Images Crushing credit card balances, sky-high interest rates and minimum payments you can barely afford: If this sounds familiar, you may be looking for solutions to help solve your debt problems before they get worse. And, during that search, you may have come across ads from debt relief companies promising to slash your debt and make the debt collector and creditor calls stop. When your finances feel like they're spiraling, those offers can be hard to ignore. And now that Americans are carrying record-high credit card debt — and average credit card APRs are still high at north of 21% — many struggling cardholders are turning to these companies for help. That makes sense, considering that the idea of reducing your balances or paying just a fraction of what you owe can sound like a lifeline, especially when you're drowning in growing credit card bills that you can't fit into your budget. But before you sign up for a debt relief program, it's important to separate the hype from the reality. Debt relief companies can help in some situations, but they also have their limitations. Here's a closer look at what they can and can't do for your credit card debt. Take steps to get rid of your high-rate credit card debt today. What debt relief companies can do for your credit card debt Legitimate debt relief companies offer several services that can genuinely help consumers struggling with overwhelming credit card debt. Their primary function is debt settlement (also known as credit card debt forgiveness), where they negotiate with your creditors to accept a lump sum payment that's less than what you actually owe. This process can result in significant savings, reducing your balance by 30% to 50% on average, though the exact amount depends on your specific situation and the company's negotiating skills. Many debt relief companies also offer debt consolidation programs to those who qualify. These debt consolidation programs work similarly to traditional debt consolidation — they roll multiple debts into one loan with a lower rate, making it easier and cheaper to manage your debt. However, these debt consolidation programs come with a key advantage: They partner with third-party lenders who specialize in working with clients who have minor credit issues. This means you might qualify for consolidation options even if your credit score has taken some hits from financial struggles. Beyond these core services, debt relief companies often provide their clients with valuable education on debt-related issues. They help you understand your options, the consequences of different approaches and strategies for managing your finances going forward. This educational component can be particularly valuable for people who feel overwhelmed by financial jargon or unsure about their rights as consumers. These companies also offer a structured approach to debt resolution that many people find valuable. Instead of juggling multiple creditor calls and trying to negotiate on your own, you work with professionals who have established relationships with major credit card companies. They handle the communications, develop payment strategies and can often secure better terms than you might achieve independently. So, for people facing genuine financial hardship, such as job loss, medical emergencies or other major life changes, debt relief companies can provide breathing room and professional guidance through what can be a stressful process. Find out what debt relief options are available to you now. What debt relief companies can't do for your credit card debt While debt relief companies can offer significant help to the right person in the right situation, they also have limitations that you need to understand before enrolling. To start, they can't guarantee settlements or results. Creditors aren't required to negotiate, and some may refuse to work with debt relief companies entirely. But even if a company has a track record of success, every case is different. No one can promise a specific outcome. They can't stop the damage to your credit while you're in the program, either, particularly with debt settlement. Because most programs require you to stop making payments while saving up for lump-sum settlements, your credit score will likely take a significant hit, sometimes by 100 points or more. The missed payments will also stay on your credit report for up to seven years, even after a settlement is reached. They also can't prevent legal action by creditors or debt collectors. If you stop paying your creditors during a debt settlement process, you run the risk of being sued. And while some debt relief companies may help you respond to lawsuits, they can't make them go away. It's also important to know that debt relief companies can't charge upfront fees for settlement services under the Federal Trade Commission's rules. If a company tries to collect payment before settling any debts, that's a red flag. Reputable firms wait until at least one debt is successfully resolved before charging a fee. Finally, they can't do anything you couldn't technically do yourself. If you're comfortable negotiating and managing payment plans, you can call your creditors directly and request hardship options, settlements or rate reductions. Debt relief companies provide structure and support, and their experience with negotiations — and the relationships they've built with creditors — often results in a better outcome than taking the do-it-yourself approach, but they aren't your only path forward. The bottom line Debt relief companies can offer valuable support for credit card borrowers who feel overwhelmed and out of options, but they're not always the right option and they have their limitations. At best, they can help you reduce what you owe or restructure your payments so you can get back on solid ground. But at worst, they can cost you time, money and a big drop in your credit score without delivering real results. If you're considering working with one, do your homework. Look for companies with transparent fees, clear timelines and a proven track record. And remember: You still have the power to take control of your debt, whether that's with help from a professional or by creating your own plan to move forward.
