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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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I am considering doing debt settlement and would like to know

Resolved Question:

I am considering doing debt settlement and would like to know if these programs are scams/will hurt my credit or if they are just not good to do. I am checking out I talked to a rep today & he told me I would have to put $325/mo into a savings acct-he said I would have to pay him a fee of 15% of the total debt I owed. He said that for the first 3 mos $275 would be taken from my acct to cover his fees, then for the next 21 months $132.14 would be taken to cover his fees. After that the full $375 would be used to pay off my debts. He said that during the time I was paying off his fees he would be negotiating with my creditors to reach settlements & he expected he could get a 50% reduction on all my bills over $600 (all medical bills). He said that if I started the program I would have to stop pymts to all my creditors while he negotiates w/them & that he would provide me with a "script" to read to them if they call asking for pymts. Is this a bad thing to get into?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.

I cannot give you information on the particular debt consolidation/settlement program that you are considering. However, a debt settlement program will typically have a negative effect on a debtor's credit. You will need to stop paying the bills for at least one month prior to commencing the plan. Your credit reports may indicate the past due status. If you complete the payment plan, your credit reports may indicate that you entered a settlement program.
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