Old debt follows some consumers into the new year. There is no quick fix for financial resolutions and companies that make unrealistic guarantees probably can’t deliver. Better Business Bureau serving Alaska, Oregon and Western Washington outlines options on the road to debt recovery.
BBB’s Managing Credit—Made Simpler: If obligations seem overwhelming, use bbb.org/credit-management for free insights.
Lenders or Debt Collectors: Before enlisting outside help, consult with lenders or debt collectors directly. Discuss loan modification options to help reduce interest rates and make payments more manageable. On unpaid debts, retain details in writing; attempt to work out payment plans, meet obligations on time and stay in contact throughout the process.
Counseling: Try nonprofit credit counseling services. Consultations are free or involve minimal fees.
Debt Consolidation: Weigh options carefully. Companies combine outstanding debts or multiple loans into one loan—in an effort to reduce interest rates and lender accounts—making payments more convenient and manageable. If companies charge excessive fees or interest rates, consumers will end up paying more money over longer periods of time.
Debt Settlement: Proceed with caution, contracts and communication. Companies negotiate with creditors or lenders to reduce balances; consumers must pay debts and settlement companies for negotiation support. If companies fail to communicate with debtees, consumers will still be financially liable; unpaid debts can lead to penalties, late fees and legal actions—which negatively affect credit reports.
Debt Elimination: Don’t buy it. Most offers to “repair,” “rescue,” or “eliminate” debt are scams. Some companies charge large upfront fees to absolve debts; however, consumers later find that documents have no legal bearing and money is still owed.
- Research BBB Business Reviews on companies at bbb.org before enlisting services.
- Ensure that debt management service providers are registered with the Oregon Division of Finance and Corporate Securities at cbs.state.or.us/dfcs.
- Avoid paying upfront. Get written contracts detailing anticipated results, timelines, fees and guarantees. Money may be better spent directly paying back debts.
BBB's Consumer Hour: Debt and Credit is a free one-hour session on how to lower debt, improve credit and avoid scams. Oregon Department of Finance and Corporate Securities will provide oversight on state regulations. ClearPoint Credit Counseling Solutions will be offering free consultations following the event. Join BBB on Wednesday, Jan. 30, 2013, from 12 p.m. to 1 p.m. at 4004 SW Kruse Way Place, Ste. 375, in Lake Oswego, Ore.