Debt Settlement

Debt settlement is a service offered by companies that try to negotiate with your creditors to reduce the amount you owe. Instead of paying your creditors directly, you make monthly payments to the debt settlement company. They keep your money in a holding account and, once there’s enough, they try to settle your debts for less than the full amount.

What to know before signing up

Debt settlement might sound like a good solution, but it’s not guaranteed to work, and it can come with some risks:

Renegotiating your debts, including with a debt settlement company, may lower your credit rating or credit score.
Your interest rates may increase during the time that your debt remains unpaid. This may increase the amount you have to pay back.
Your creditors may not agree to any settlement.

Consider other ways you could pay off your debts, like negotiating a repayment plan with creditors on your own.

Before you sign a contract

If you decide to work with a debt settlement company:

Review all terms carefully

Understand how much you’ll pay, how long the process will take, and what happens if creditors don’t agree.

Don’t pay upfront fees

Debt settlement companies can’t charge you until they’ve successfully settled your debt.

Cancel if needed

You can cancel the contract within 10 days of receiving it. You do not need a reason to cancel. If you wish to cancel:

tell the company in writing (by letter you deliver in person, email, registered mail, prepaid courier or fax)
keep a copy of the written cancellation notice to provide proof of the date you gave your notice

For more information regarding settling debt, view the Rule CDSS-001 Debt Settlement Services.