If you have a large amount of credit card debt and are looking to resolve some of it there are many programs out there that say they can help. However, the question is whether they actually can. In many cases yes these debt resolution programs can reduce your monthly payments by a considerable amount and they probably will save you some money in the long run as well. These amounts they save you will not be the large numbers that they advertise but they will definitely help take a small chunk out of some of the debt.
Debt resolution involves a company talking to your creditors in order to settle your debt into one lump sum. The more debt and creditors you have the harder it will be to get a better rate, but with their negotiating skills they can definitely be a help. Once it is in a lump sum they will ask you to pay a minimum fee every month in order to diminish the debt slowly. There will still be an interest rate but it will not be higher than the ones you were already paying on your credit cards. The companies that offer these debt resolution programs will also tell you to stop paying your other creditors their monthly fee. This way all the money can go towards the lump sum.
Using a company to settle your debt also has its risks as well. Some of them will require you to deposit money into a savings account for up to 48 months before they will settle any of your debts. Many clients drop out because they cannot make the payments and therefor lose all the benefits of this program and even more. Another reason is that the creditors that you have signed a contract with have no obligation to talk to and negotiate with a debt resolution company. Most of them will if they think it is the only way they will get paid though. Using debt resolution can also negatively impact your credit score as well due to the stoppage of monthly payments and the restructuring of the interest rate.
Debt resolution is only a good idea for those who are in dire need of debt relief and it may negatively impact those who aren’t. Make sure to follow the contract deadlines and remember to not get into debt the next time!