What is a debt negotiation company and how does it work?”
These companies work with your creditors to try and reach a settlement agreement. The settlement company establishes a payment that you make each month directly to them. The payment goes into a savings account until the balance reaches an amount that the creditor will accept as a settlement. While you are making payments to the debt settlement company, your creditors are not receiving any money. This means the creditor may send the account to collections (which will result in a negative mark on your credit report) or proceed with legal action. Legal action may result in a court judgment and wage garnishment. In addition, your credit report will be updated with late fees and other derogatory marks. Before using any debt settlement or debt negotiation company, check them out with the Better Business Bureau.
