What are Licensed Insolvency Trustees, credit counsellors, and debt settlement businesses?
Question & AnswerWhat are Licensed Insolvency Trustees, credit counsellors, and debt settlement businesses?
Learn what debt settlement businesses do
Debt settlement businesses are for-profit businesses. They make money by charging you a fee to help you make a debt repayment plan. But they're not always able to reduce your debt. And sometimes the is working for and being paid by both you and the creditors to help the debt.
Sometimes the debt settlement company will pay off only one debt at a time instead of negotiating with all your creditors. This means that some of your creditors could try to sue you to get the money they're owed. You can be sued even while you're paying off the you owe to other people.
A debt settlement business will set up a repayment account to help settle your debts. You should understand how any repayment plan works before you agree to it.
Here are some things to remember when dealing with a debt settlement business:
- they might advertise that they can lower your debt or get rid of it but this is not a guarantee
- they are only allowed to charge you a fee after they have successfully made a plan to reduce your debt and pay it off
- they have to contact your creditors within 15 days of when you sign a contract with them
- any of your creditors can refuse to accept the plan, and can still try to collect the money from you