Credit card debt services offer to help you negotiate better deals with the credit card companies, settle your debts, and various other things.
They sound like they are a good way to deal with debt, but that isn't always the case.
There are several potential problems that you can run into when using these services.
Let's look at a few of them...
It Can Impact Your Credit Score When these services contact your credit card company, they will often put a note on your credit report about the situation.
This can cause your credit score to drop, and can also cause you to be declined for other items because they are there.
It Can Cost You More Many of these credit card debt services work by taking a lump-sum payment from you and then distributing it to all your credit card payments.
If they don't make the payments on time, you can wind up paying more in interest costs as well as late fees that get added to your next bill.
Because you are not in control of these payments, you are not able to manage them as effectively.
It Can Lead To Legal Issues You can still be sued when using a debt settlement company to handle your debt.
Unlike bankruptcy, it does not give you any kind of legal protection so you are still at risk of being sued.
Tax Consequences If the debt service manages to get some of your debt canceled for you, it can have tax implications.
You will be taxed on the amount that is canceled, as it is essentially a form of income for you.
As you can see, there are a number of potential issues when dealing with a credit card debt service.
Before taking that step, you should always ensure that you have taken all the steps possible to get your debt under control yourself.