Are debt negotiation companies legitimate and worthwhile? Does anyone have any experience with them?

Question

I understand this will have an impact on my credit score, but from what those companies tell me, they are able to reduce outstanding credit card debts by 40%+.  Is this true or too good to be true?

mj69catz · Accepted Answer

It depends on the agency you use, and how dedicated you are to using it. 

My father used an agency before he died several months ago.  It was difficult for him to live on what was left (because he was old and ill and had high medicine expenses) but that was what he got into.  However, what his company did is they did an autowithdrawl monthly after his Soc Sec. payment came in, taking out his monthly amount.  Then 5 days later they paid the creditors.  An agreement was made with most creditors to reduce the interest and avoid any late payment charges as long as the payment was made regularly and on time. 

This did help him reduce his debt. 

But it doesn't work for some people.  Most people get caught up in the credit.  They get the calls to stop, then they want something that they dont have and they start up a new credit card or overdraw or something like that.  Then you are back where you started, but now you owe money to the debt negotiation company. 

If you really want to do this, and are willing to do it right -- you may be able to do it yourself.  Most banks have an online banking feature these days that lets you create regular online payments.  You can determine exactly what you can pay each month to each creditor.  Then contact the creditor.  Come clean and let them know that you are trying to work things out and you will not 1. charge up any new debt until all debts are paid. and 2.  pay regularly and on time each month  -- if you can get the interest reduced on the charge.  Explain that you are using an automatic withdrawl and so the payment should come at the same time each month. 

Many of these companies will work with you as much as they would with a negotiation company.  Their workload is reduced because they can stop collection calls, and all they have to do is verify that your payment is received. 

However, you have to be really good about making those payments ON TIME EVERY MONTH -- don't skip because you needed a couple days off of work to help a friend -- this is your life and your money you are dealing with. 

Good Luck!

Anonymous · Answer

http://answers.yahoo.com/question/index;_ylt=AuupdoA498F9ugSty_17joHty6IX?qid=20061119115258AAo5kjd&show=7#profile-info-b68b06e32cf146a84918e052e93a63c9aa

This link has the answer to your question i believe.   I looked on the website and i noticed that they have a settlement letters under the about us page.  

Also this link seems to have some good info: http://www.fdnsolutions.com/settlementletters

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Are debt negotiation companies legitimate and worthwhile? Does anyone have any experience with them?