Get Out of Debt Guy - Steve Rhode

Are These Credit Card Debt Relief Offers Real?

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Question:

Dear Steve,

I have a large over $50K in credit card debt. Most was racked up during an injury.

I get debt solution letters daily promising help. Are any of these “debt relief” companies real?

Brian

Answer:

Dear Brian,

It’s amazing how such an innocent question can be so complicated to answer.

The offers are real but that doesn’t mean they are either factual or right for you.

I would expect your mailbox is flooded with debt relief offers. But let’s look at those in a different light. These are not offers to provide you with the best financial advice. They are sales letters in an effort to sign you on as a customer of that company.

You need to consider them in the same light you would think about an offer from your local car dealership about the latest model is now in stock. Hopefully before you rushed to buy a new car you’d do some research like look at reliability or fuel economy. Or you might be one of the folks that leaps at the newest model for an emotional reason.

Many people leap at debt relief offers for emotional reasons. Typically it’s because the offers sound so magical and the consumer just wants the negative situation to go away with as little involvement and work as possible.

But here is the basic problem with those offers, there is no one-size-fits-all solution that works for everyone in every situation. Every financial life is like a fingerprint, they are all different. Let’s say you received an offer to settle your credit card debt for 40% of what you owe.

Is it possible to settle a credit card for forty cents on the dollar, it is. But should every credit card you have be settled or will all settle, that’s unlikely.

When you have multiple debts like a car lease, some credit card debt, student loans, and store cards you should evaluate the best way to handle those in the greater context of where you are today and what your future financial goals are.

For example, if you want to dispose of your federal student loan debt in the least amount of time and pay the smallest amount of interest then you’d want to look at disposing of your unsecured debt as inexpensively and quickly as possible. A logical solution to consider would be bankruptcy. Then you’d want to get on the standard 10-year repayment plan on the federal student loan debt.

The same considerations would apply if you were in your late 30s and had yet to save for retirement. In that case time is not your friend and an extended repayment approach would rob you of retirement savings. Just use my calculator to see how much you’d lose.

The letters you are getting are trying to get people to call so a commissioned salesperson can close the deal. These salespeople are not financial experts or really even debt experts. The prevailing message will be their widget is the best thing for you to buy to solve your problem and they will generally talk down all the other solutions.

You can use my Get Out of Debt Calculator to look at the different options and compare the pros and cons of each.

As far as the companies being real that’s not always something you can count on. Some debt relief offers company from companies that are not even registered to do business in your state.

I would invite you do some homework and use my free guides below to take a look at any company you might think about using.

The fact your debt is the result of a medical issue is very common. Thinking about solutions like bankruptcy does not make you a loser. It makes you quite common. Medical debt and medical issues are a huge reason why people file for bankruptcy.

I would invite you to find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

Best of luck on your journey to dealing with the debt. I hope you can find a good independent debt coach to give you a good overview of your situation and a plan of action to make your future better.


Big Hug!
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