If you're having trouble managing your debts, it's important to know who to talk to. There are a variety of options available, from credit counseling and debt management plans to debt settlement programs and filing for bankruptcy. A trusted financial advisor can help you chart a course for a healthy financial future. When dealing with debt collection companies, it's important to report any problems you have to your State Attorney General's Office, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB).
Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Credit counseling is a service offered to people with excessive debt as an alternative to bankruptcy. A credit counselor will work one-on-one with you to provide financial education, credit analysis and a working budget. For most of those who talk to a counselor and are serious about getting out of debt, counseling has proven to be a successful alternative.
If you need proof that you owe the debt, you can call 888-826-3127 and talk to a debt recovery analyst. They will obtain the documents about your debt from the agency and send them to you. If your monthly payments seem too high, they may be able to enroll you in a debt management plan or recommend a debt consolidation service. After the consultation, you can choose to have a credit counselor help you establish a payment agreement with your creditors under a debt management plan (DMP).
Debt counseling can only help with collection accounts if the collection agency agrees to participate in the DMP, which may not happen. The debt counselor may be able to negotiate a lower interest rate or obtain a reduction or waiver of your financial charges. The Treasury Department's Tax Service Office cannot decide that you don't have to pay anything for a debt you owe to another federal agency. However, they can provide information on how to manage your finances and debts.
Your initial credit counseling session will provide you with this information. Debt settlement programs are often offered by for-profit companies and involve them negotiating with your creditors to allow you to pay a settlement to settle your debt, a lump sum less than the total amount you owe. If you think you don't owe the debt, you can dispute it (tell us why you think it's a mistake). Enrolling in a debt management plan allows you to stop making separate payments to each of your creditors and instead make one payment to a credit counseling service that will then distribute the money to your creditors.
Debt counseling can provide you with the professional guidance you need to manage your debts without having to file for bankruptcy. In Chapter 13 bankruptcy, the court approves a payment plan that allows you to settle your debts over a period of three to five years, without surrendering any property. If a debt is a type for which there is a statutory exemption authority, only the agency to which you owe the debt can exempt it (decide that you don't have to pay anything) from that debt. Most financial advisors only advise their clients what steps they should take, leaving the fieldwork up to each individual seeking debt relief.
