What Is A Credit Card Debt Relief Program

May 26, 2021

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You tell yourself every day that you’re going to tackle your debt. Well, the time has come -- and you know it. But you need professional help. A debt relief program could wipe out all those pesky monthly obligations. But what is a credit card debt relief program? Read on to find out.

What is Debt Relief?

Also called debt settlement, this financial strategy involves hiring a company to bargain with your creditors – typically credit card issuers – to get them to permit you to pay less than what you owe to settle your debt.

As an inducement to get creditors to sign on, most debt relief companies will have you to cease making payments and instead put that money into an escrow-like account that you control. When you have saved sufficient funds, the company will offer each of your creditors a one-time payment in full.

There Are Risks

Your credit score will get hit because you stopped paying those bills. But it probably hasn’t been stellar in a while -- right?

You should also be mindful that your creditors are not obligated to agree to negotiate a settlement. You need an experienced company like Freedom Debt Relief on your side. In fact, FDR has been at it for nearly two decades.

You should note, too, that it could take three years or more before your debt is settled. So, you need to be able to put aside money monthly for the duration of the program. Remember: you didn’t incur all that debt overnight. You’ll need forbearance and diligence to see your way through.

Watch for Scam Programs

What is a credit card debt relief program? How about, what isn’t? Legit companies don’t engage in deception and fail to deliver on promises. They don’t say, “guarantee” to settle all your debts for a certain percentage, because such guarantees are impossible. Quality programs also don’t try to collect fees from you prior to settling any of your obligations, because that practice is federally prohibited.

You also want to give a wide berth to companies that tout “a new government program” to get you out of credit card debt.

Research Debt Relief Programs

You need to do homework before enrolling in a debt relief program. Run the name of the company you’re interested in past your state attorney general and area consumer protection agency. They can inform you whether there have complaints. Ask the AG whether the company must be licensed to do business in your state, and if so, whether it is.

Disclosure Requirements

Before enrolling in a program, the debt relief company is obligated to provide you with certain info. To wit, it must explain its fees and terms, and how long it will take to get results. It also must inform you how much you must save before it will make an offer to each creditor. What’s more, the company must explain to you the potential negative consequences of not making creditor payments, and that you may withdraw the money you’ve saved at any time.

The Benefits of Debt Relief

For certain consumers – you? – there are benefits to debt settlement. No. 1 may be to avoid bankruptcy – a debt solution that could follow you the rest of your life. You’ll also get relief from overwhelming debts, and you can repay your debts in much less time than you’d spend paying them off on your own.

What is a credit card debt relief program? Well, now you know. As with any debt solution, you must decide if it’s right for you. It wouldn’t hurt to call a company and start a conversation, though. You may be glad you did.

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