Consider credit counseling before accepting debt settlement plan

Before consumers accept debt settlement for what they owe on their credit cards, they should consider consumer credit counseling.

In a recent article by Bankrate.com’s Steve Bucci, a reader wondered if they should accept a debt settlement plan from a collection agency and whether the original lenders would be able to come after them again.

Bucci noted that rather than jump right in to a debt settlement plan, consumers should consider credit counseling. The reason is that a debt settlement plan could end up negatively affecting a person’s credit score. A credit counseling service may be able to set up a debt management plan for the consumer, which can help them pay their debt in full.

However, if doing so won’t help the consumer and they end up in a debt settlement plan, they should make sure to get the offer in writing before agreeing to it. If they do, the original creditors will not be able to collect on the identical debt, Bucci said.

“Be sure that you can realistically afford the one-time settlement payment or monthly payments in the agreement,” Bucci wrote. “Be sure you send it in on the due date and use certified mail with a return receipt requested.”

When it comes to credit counseling, a recent column from the San Francisco Chronicle’s Erica Sandberg noted that just visiting a credit counselor won’t hurt a consumer’s credit score.