6 debt relief myths DEBUNKED! ❌ - YouTube

Hey y’all — Jenn here from Finder.com, and today  we're diving into a topic that you've probably  

heard a good deal of  misinformation about: Debt relief.

It’s a means of taking control of your financial wellness after it's gotten out of hand.

But you may have heard some worrying rumors  (alongside ones that are too good to be true!)

Let's explore some of the most common debt  relief myths and sort fact from fiction.

Let's get into it!

This first one is absolutely 100% FALSE! A default  only stays on your credit report for six years  

but that debt doesn't budge an inch on its own.

Creditors and collections agencies can  demand payment even after the default  

falls off your credit report, and  probably will long before it does.

Delinquent borrowers can also be sued —  and get attorney’s fees and court expenses  

added to the bill. Whether you respond to the  suit or not, if a default ruling is carried out,  

your bank accounts could get frozen and your wages  could get garnished until the entire balance is paid in full.

This is also FALSE. Debt relief companies  took a reputation hit when some were found  

guilty of collecting fees up front  before services were ever rendered.

But the US government put a quick stop to that  in 2010. You can now easily find legit  

companies like our sponsor, National Debt Relief,  that help folks get out from under their debt.

Not sure if the debt relief company you're looking at is even legit?  

The Federal Trade Commission has a list of people  and companies that are banned from debt relief.

And you can also check for memberships to the American  Fair Credit Council (AFCC) or International  

Association of Professional Debt  Arbitrators (IAPDA) accreditation.

Thankfully, NOT at all the case. Two  to four years is pretty standard for a  

debt relief program. But if you think you  can pay off your debt on your own sooner,  

you probably don't even need a debt relief company's services, and you can just do it all on your own.

If you DO use one, your ability to save up  funds to pay off accounts and how willing  

your creditors are to settle will determine how long it takes you to complete your program specifically.

This one is another BIG FAT F FOR FALSE.

A January 2021 report by Harvard Kennedy School  

found, on average, 74% of people using  debt settlement programs between 2011  

and 2020 successfully  settled at least one account.

It also reported an average  savings after fees of $5,400.  

And, on average, 55% of debt was  settled after 36 months in a program.

This is TRUE and goes back to the 2010  government crackdown I mentioned earlier.  

In fact, it's thanks to a 2010 amendment to  the Telemarketing Sales Rule, debt relief  

companies can NO LONGER charge fees  before settling at least one account.

It can, however, require you to start  paying into an escrow account that's  

under your name straightaway. This is to build up savings for paying off the settled accounts once they're able to.

This last myth... well, it all DEPENDS. If you're able to  complete the program, it may eventually  

lead to your credit score improving by virtue  of helping you get your finances cleaned up.

But any defaults that happen before or during  the process will remain on your credit report  

for up to six years. Something that won't  go away just by paying the account off.

Debt relief companies can be a huge  help if you have a large amount of  

unsecured debt and a steady income.  For more information about debt relief,  

check out our guide on Finder.com linked below.

You can find out more about today's sponsor by reading our review, also linked in the description box below.

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And if you learned something, go ahead and  give this video a like while you're at it.

Have even more myths you want  the truth on? Leave a comment below,

and we'll get back to you as soon as possible.