Debt relief, also referred to as debt settlement, is a service that can reduce your debt by negotiating settlements with your creditors or debt collectors.
Debt settlements will negatively affect your credit if it is currently in good standing so a proper review of your situation by one of our debt settlement consultants is very important.
You will want to ask how this could impact to your FICO scores and address any concerns in advance. You can do that for free with DebtKO - click here.
Here’s some key information you should know about how debt settlement works, its pros and cons, and how it could affect your credit.
How debt relief works
Debt settlement is also known as debt relief, debt adjusting or debt negotiation. Debt settlement companies will generally offer to contact your creditors on your behalf, so they can negotiate a better payment plan or settle or reduce your debt. They typically charge a fee, often a percentage of the amount you’d save on the settled debt.
The company may try to negotiate with your creditor for a lump-sum payment that’s less than the amount that you owe. While they’re negotiating, they may require you to make regular deposits into an account that’s under your control but is administered by an independent third-party. You use this account to save money toward that lump payment.
While they negotiate, the debt settlement company may also advise you to stop paying your creditors until a debt settlement agreement is reached.
Once the debt settlement company and your creditors reach an agreement — at a minimum, changing the terms of at least one of your debts — you must agree to the agreement and make at least one payment to the creditor or debt collector for the settled amount.
And then the debt settlement company can begin charging you fees for its services.
What is a successful debt relief?
A successful settlement is one that “allows a client to walk away without having to pay their full debt amount.” It is important to remember that there is no guarantee that the company will be able to reach a debt settlement agreement for all of your debts.
Why use DebtKO?
DebtKO never charges you for your initial consultation and will review your situation on case by case basis. DebtKO team members have been working in consumer debt since 2003 so have a vast understanding of the debt reduction market.