Paying Off Debt

[trulyblezzed]

I'm not sure if I'm posting in the right forum, but I have a question about paying off debt. I know that it's wrong to owe people money and I have a few thousand dollars in debt from before I was a Christian. All of my accounts are in collection and a majority of them have been sold to third party collection agencies. These agencies are now willing to settle with me for a fraction of the price, which I see as a blessing and I want to take advantage of it.

However, my husband met some debt management guy who told him that it's illegal for these third party agencies to collect the debt. He said the credit card companies already wrote my debt off as a loss and they were reimbursed by the government or something like that. So he refuses to allow me to pay my credit cards I really want to get out of debt being that I'm able to right now financially, but I also don't want to pay a company for what they already got paid for.

Does anyone know how settlement works? I just want to get out of debt and get my credit back in order. Any great advice would help!!!

 

[Boanerges]

It is something that should be approached with a prayerful attitude. Debt settlement companies generally take your debt and merge it with others. They then offer the credit companies a settlement on one of these blocks of debt at a time. The average settlement is around 40 to 45 cents on the $ which will then be payed by you in the form of monthly (interest free) payments spread out over 3 to 4 years.
The negotiating team will generally get between 5 and 15% of the reduced debt depending on how low they are able to settle this debt.
The collection agencies are legally able to harass you for 90 days. If they call at work you can tell them that if they keep calling you at work you will loose your job so please do not call you there again. In most states they would be legally required to stop with that notification.
This will basically destroy your credit rating for some time but it sounds like that is already going on.
This is the tricky part: some of these guys are on the up and up and some are not. Make sure that if you deal with one of these companies you check their ratings with the Better Business Bureau. It is also a good idea to compare rates.