From KSET and FOX 4: Differences Between Debt Consolidation, Debt Negotiation and Debt Elimination

Consumers are bombarded every day with ads and e-mails offering services to manage or reduce debt and it’s hard to know which offer will work for them, let alone if the company can be trusted.

Debt negotiation companies claim that they will negotiate with a consumer’s lenders to lower the total amount of debt owed for an upfront fee.

Debt consolidation companies offer to roll up various debts allowing the debtor to make one lower payment to the company, rather than many payments to the different lenders.

Debt elimination companies typically provide, for an upfront fee, a document for the lender that supposedly absolves the consumer of the debt.

2. Advice for consumers BEFORE enlisting the help of a business to manage debt …

• Stay in contact with lenders and try to work out a plan with them first before enlisting outside help.
• Always check the company out first with BBB.
• Start with a credit counseling service. Credit counseling services are often nonprofits that offer financial guidance for a small fee, or even for free.
• Beware of offers that sound too good to be true. There is no easy fix for reducing debt and any company that makes huge claims and guarantees, probably can’t deliver.

3. What about more advice on dealing with debt and managing a budget?? 
For more trustworthy and timely advice, check out our credit tips at bbb.org.