It sounds easy. Debt resolution companies offer to get creditors to settle for far less than you owe. All you have to do is give them a couple of thousand dollars up front and make a reasonable monthly payment after that.
But this is what could happen:
* They make no payments on credit cards and other loans for several months, if ever. Your credit card and loan balances explode with late-payment and interest charges.
* You could be plagued with calls from creditors and collection agencies. You could be sued and your wages could be garnished.
* Your credit score plunges. Even if they manage to make a settlement for less money than you owe on an account, the arrangement makes your credit score fall even more.
* By the time you realize they have not kept their promises, you could owe thousands of dollars more than when you signed on to the plan, and they still have your up-front money.
* If you take them to court, you discover that the debt resolution company has no assets. There is no way to recover any of the money you have paid them.
Some non-profit companies do help, but a recent IRS investigation shows that many are not non-profit at all. They send their profits to an associated for-profit debt resolution company. When circumstances have put you into a difficult financial situation, you are far better off to contact creditors personally and try to make a payment schedule you can afford.