When a person falls into debt, he may approach a number of parties about solving his problem. Among his sources of help are debt relief agencies. Debt relief agencies are companies associated with law firms that help people negotiate with creditors. These agencies may provide their clients a number of different services related to debt management. However, nearly all provide some sort of assistance in helping the individual conduct negotiation with collection agencies.
Debt Relief Agencies
Debt relief agencies, also known as debt settlement companies, are government-regulated firms that help people manage their debt by reducing the overall size of their debt burden. In some cases, a debt relief agency may suggest that the person consolidate his debts, refinance certain loans or modify the repayment terms of debts with his lenders. However, most often, debt relief agencies will specialize in conducting negotiations with creditors, including collection agencies.
Collection Agencies
Collection agencies are little different from normal creditors. Often, collection agencies will work on commission for creditors, or they will simply buy the debt and become its owners. A debt relief agency will negotiate with whoever currently owns a person's debt or is tasked with administering it. A collection agency, whether working as a representative of a creditor or on its own, has the same rights as the first creditor to collect on the debt.
Debt Counseling Companies
Debt relief companies may be confused with debt counseling or credit counseling firms. In fact, these businesses are very different. Credit counseling firms are not associated with any legal counsel, and are not subject to the same strict regulation as debt relief firms. This can lead to less reliable service and results. In fact, some credit counseling companies are financed in part by creditors, meaning they may not have their clients' best interests at heart.
Considerations
A person does not necessarily need a debt relief agency to conduct negotiations with the collection agencies. While the debt relief agency may be more skilled at conducting the negotiations, it also commonly takes a cut of the proceeds. A person may be able to save money by attempting to negotiate with the collection agency directly. However, some collection agencies may not be open to any kind of settlement.
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