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Christian Credit Counselors is a non-profit organization that was created to help individuals and families regain control of their finances through the use of educational tools, credit counseling and other resources.

What is Debt Settlement?

Debt settlement (also known as debt negotiation) is considered an aggressive approach to quickly reduce debt, while trying to avoid bankruptcy.

A debt settlement representative negotiates with your creditors, for a fee, to settle your debt for a lower amount than what is owed, typically 40-60% of your balances.

What Debt Settlement companies say they do:

• If you have $20,000 in debt, we can reduce it to $10,000

• If you are making payments of $800, we can reduce it to $400

• We will have you out of debt in 2-4 years

• Eliminate extra charges

• Avoid lawsuits and legal actions

• Avoid bankruptcy

What really happens:

• Start-up fees can be hundreds of dollars

• The debt settlement company advises you to stop paying your creditors

• You are required to deposit a certain amount of money into an account each month (although none of this money goes to your creditors for several months)

• Your credit score goes down due to past due balances and late fees

• Your creditors start calling 6 or 7 times a day

• The company waits until the total amount of your deposits grows to the appropriate level and then offers your creditor a lump-sum of money.

• You will still owe taxes on the “forgiven debt” should the settlement prove successful

• Your credit report will reflect the amount as “settled” instead of “paid in full”, which have a negative effect on your credit score

• There is no guarantee that your creditors will settle for a lower amount

• When the settlement doesn’t work, many people are then forced to file for bankruptcy anyway