A.C.
I work for a debt collector and specifically am the person in charge of all credit counseling and debt settlement accounts. The advice I would give you is not to pay a settlement firm or credit counselor. It truly is a waste of money and I am so surprised at how many people DO pay to do this.
This is what you can expect a credit counselor/debt settlement firm to do:
1- Gather a list of all your debts (they would most likely have you provide a copy of all loan agreements, bills, etc. You can obviously do this on your own, for free.
2-Some will request validation of debts from creditors to make sure they are valid
3-Some will send a letter to creditors to ask that they no longer call the debtor and no longer debit your checking account
4-Then they will either send a monthly payment proposal or a one time settlement offer proposal to lenders
5- Each company is different, but either the credit counselor will have you make a monthly payment to them and then they would cut individual monthly checks to each creditor, or they will have you save funds on your own and they will present settlement offers to you and have you pay them on your own if you agree.
There is no reason to not just do this on your own and save hundreds to thousands of dollars. Also I find that so many of our customers have no idea what is going on with their account (they think the credit counselor paid it, or they are unaware of credit reporting, etc) just because a third party is doing the communicating.
Here is what I would suggest for you:
1- get a free credit report and see what debts are listed
2- Make a list of all debts including the creditor name, phone number, address, amount owed
3- If you are unsure, send a letter requesting validation of debt, they are legally required to send you a proof of debt and advise you of charges, what you have paid, current balance, etc.
4- Do your budget and find out what you can pay toward your debt
5-Contact each creditor and either propose a monthly amount you can pay or a lump settlement offer. Get settlement offers in writing.
6- Keep accurate records of what you paid.
And, yes, most creditors will accept a settlement. We would rather get something than nothing. Creditors WANT to work with debtors most of the time. Good luck.