Has anyone heard of debt negotiation companies? Do they work and are they legitimate. How will effect credit?

I have spoken to one of these companies who has advised they will be able to negotiate my debt down to approx. 40% of original debt. There has been a major event in my life that does not allow me to continue normal payments. I would prefer not to file for bankrupt.

Has anyone heard of debt negotiation companies? Do they work and are they legitimate. How will effect credit?
Settlement can make sense in some situations. Howver, if you choose to work through a settlement company, there are a few things you should know.





The costs can be staggering. You generally pay an upfront fee, monthly fees and a percentage of the "savings." In addition, any savings of $600 or more is automatically reported to the IRS as forgiven debt, which is generally taxable as a form of income.





Keep in mind that debt settlement can sometimes damage your credit further. Credit counseling is another option that helps to rebuild your credit, but it will cost you a bit more in the long run.





Hope this info helps.
Reply:Most of them are shady, and some will even get you in a worse situation than you're in now. Approach your creditors, explain your situation and they might accept interest free payments.
Reply:I have heard this. Do NOT go with one that charges a fee. There are ones that work for you for free.


They do this by consolidating your bills or making arrangements with your creditors and take an automatic deduction from your pay check.


Usually you have to have a job that will allow this automated deduction, so if your not working OR you work for cash you may have difficulty.


Yes I have heard its worth it.I don t believe it affects your credit adversly because you are paying off the debts ( usually you can no longer charge on those credit cards either)


You may also want to check with the credit card companies directly. Get a person who woll listen to you, so if you call and the person sounds like an idiot and wont discuss it, tell them youll have to call back, then call again.


Explain your situation, if its medical or other legitimate issue they will listen usually, see if you can negotiate a lower interest rate , payments, NO interest and no longer use of the card etc. Tell them you want to meet your financial needs and pay them as well as keep your credit report free of adverse comments,


Tell them you do not want to be forced into bankrupcy.





( also check out that lady Suze Orman... she sometimes has helpful tips on her website)


Good luck, sorry for the long answer.
Reply:Actually I have heard the credit bureaus do lower your score if you went to one of these. Maybe at this point for you it's still worth it. Good luck.