Let me try one more time to explain this: there are 4 types of debt correction / elimiination / collection companies. NONE of them are on your side. They all work for the original creditor or the debt collection industry in one form or another. They're known by a bunch of different names and descriptive phrases so it sometime hard to determine what you're dealing with, but here's the way they work.
1. Non-profit, debt settlement company. They call themselves and may even register as non-profit or not-for-profit organizations so that they can take advantage of certain tax laws. They tell you they will arrange for your creditors to charge less interest and eliminate late fees, etc. You're supposed to send them one large check each month, and they will divide it up among your creditors and make your payments. In order to do this, these places actually have agreements with some creditors. They've told the creditor that "some money is better than none" and the settlement company will see to it that you pay every month. In effect, they're collection agencies that work for the creditors...but you pay them. Also, they may not have agreements with all your creditors. The ones that are not included, don't get paid. The ones that don't get paid wind up suing you anyway. Okay, so instead of having 10 bad marks on your credit report, you only have 5. Big deal...your credit is still trashed. And, for the creditors that don't play along, you get to go through the collection process...see item 3.
2. Debt elimination companies. These are the ones that tell you to stop paying creditors, put what money you can afford in a savings account and at some point down the line they will negotiate a settlement with your creditors for a smaller amount. You give them money up front, and they say they'll take a small percentage of what you don't have to pay as settlement. They want the up front money because they know that again, this only works if all your creditors play along. Some of these companies are outright scams. They know that most creditors don't play along, so the just take your money and do nothing. If they do attempt to negotiate on your behalf, only some of your creditors will play along. Most don't. You wind up getting sued by some, have other charge off the account, and even the creditors that do agree mark your credit reports as "Paid for less than agreed". And, all the while that you're not paying your debts you get to go through the "collection process"...see item 3. End result...your credit is trashed.
3. Collection agencies. Most creditors begin by "contracting" their bad debts over to professional collectors. At first, this is done while the creditor still owns the debt so the collector can be mean and nasty and call you at all hours of the day and night and try to intimidate you into paying. If the OC is collecting, they're not bound by the FDCPA and don't need to play nice. A contracted collector gets paid whether you pay or not. After the creditor has tried for about 6 months, they'll "assign" the debt to a professional collector. These guys only get paid if you pay and are bound by the FDCPA, so there are ways to make them play nice. They may agree to take less than the full amount for the debt, but unless you get it all in writing and know all the pitfalls associated with settling debts, they'll "forget" to report it to the orginal creditor or the original creditor will sell the balance to another collector and the whole deal starts over again. If you do pay the assigned collector, your credit report is marked "Paid collection". If you don't pay the "assigned" collector, the creditor may sue. Either way, your credit report is trashed.
4. Junk Debt Buyer. If the orginal creditor can't get you to pay, and the "assigned" collector can't get you to pay or if you settle for less than the full amount, the balance of your debt gets sold to a Junk Debt Buyer. These guys pay pennies on the dollar for the right to continue to hassle you. You don't owe them squat, but that doesn't stop them from giving you a bad time...and, trashing your credit report.
Bottom line. There's NO EASY WAY out of debt (unless you win the lottery). By turning the responsibity for your credit rating over to someone else 99 times out of 100 you wind up with worse credit than you have now. The only simple solution is to declare bankruptcy. Yes, your credit will be trashed for 7 years, but you'll the stress of dealing with your creditors will be done, and you can get on with your life. If BK is not an option then take the time to learn how the game is played, and take control all of this yourself. If you learn to use the FDCPA to your advantage, you may even make a few bucks off the low-life collectors that make their money off of other people's misfortune.
