All office hours are Eastern Standard Time...
Credit Counseling
New credit counseling clients
Toll Free: 1-877-906-5599
Certified Credit Counselors are available
Monday - Friday: 8am - 11pm
Saturday: 9am - 6pm
Customer Service
Existing InCharge clients
Toll Free: 1-888-734-6229
Customer Service agents are available
Monday - Friday: 8am - 6pm
Housing Counseling
New or existing Housing clients
Toll Free: 1-877-712-6040
Certified Housing Counselors are available
Monday - Friday: 9am - 5pm
Bankruptcy Counseling
New or existing Bankruptcy clients
Toll Free: 1-866-729-0049
Certified Bankruptcy Counselors are available
Monday - Friday: 8am - 9pm
InCharge is closed on the following holidays
New Year's Day
Memorial Day
Independence Day
Labor Day
Day after Thanksgiving
Christmas Day
Speak with a counselor @ 

Debt Settlement

What you don't know can hurt you and your wallet

Maybe you've seen the signs on the side of the road, or you've gotten solicitor calls or brochures in the mail that promise to "Settle your credit card debt" or "Eliminate debt now!" The offers are tempting - but are they legitimate? Unfortunately, in some cases, the answer is no. Not only may these claims be dishonest, some are simply scams, trying to take advantage of desperate people.

What is debt settlement? Sometimes called "debt arbitration" or "debt negotiation," debt settlement is an agreement made between a creditor and a consumer in which the total debt balance owed is reduced and/or fees are waived, and the reduced debt amount is paid in a lump sum instead of revolving monthly. The term settlement comes from the idea that the creditor agrees to "settle" your account, and also generally includes the closing of the account.

Is debt settlement ever a legitimate and viable option? Yes, but only in certain conditions, and it can cause potentially negative effects to your overall monetary situation and credit score (see the potential risks and pitfalls that follow.) Determining factors may include the total amount of debt owed, the length of time an account has been active, the length of time the account has been delinquent, along with other criteria.

No magic bullet

A commonly unknown but important fact is this: There is nothing a debt settlement provider can do to help you that you can't do yourself. While they may claim to know legal secrets, or have special relationships or concessions with creditors, they don't. There are no magic tricks, loopholes or other methods they can legally provide.

But they still get plenty of customers. And when debt settlement agencies contact and negotiate with creditors on behalf of consumers, essentially becoming the "middle man," is when people are at risk. The problem has become so prevalent that state officials have begun stepping in to protect consumers. Washington State Attorney General Rob McKenna recently sued several debt settlement providers, and New York Attorney General Andrew Cuomo launched a nationwide investigation of the debt settlement industry, subpoenaing 14 debt settlement companies and one law firm, citing misleading claims and flawed services. Similar investigations have been opened in Illinois, Florida, Texas, Vermont, Missouri, West Virginia and North Carolina.

Risks & pitfalls involved with debt settlement

1. Fees

Many debt settlement providers charge high fees, sometimes $500-$3,000, or more. But these fees are not applied to your debt - they go straight into the agencies' pockets.

2. Credit score reduction

While not as devastating as a bankruptcy, a debt settlement will have a negative impact on your credit score, even if you work directly with your creditors, as the settlement may be reported by the creditor to each of the three leading credit bureaus. This will affect your future loan terms, credit availability, employment opportunities, and more.

3. Tax implications

If a creditor agrees to settle your debt in exchange for a reduced lump sum payment, you may still be responsible for paying taxes on the reduced debt. If the settlement results in a debt reduction of $600 or more, the creditor is required to notify the IRS. For example, if you owe a creditor $10,000 and they agree to settle with you for a one-time payment of $7,500, the reduced amount, $2,500 is considered taxable income.

The bottom line: If it sounds too good to be true, it probably is. Be smart: Don't fall victim to misleading claims or pay money for something you may be able do yourself. And never sign anything you don't fully understand. It's your money - and your responsibility!

Looking for debt relief? Here's where to start.

We've included some debt relief strategies that you can begin on your own:


Depending on your situation, you may have some leverage you can use to negotiate your own debt relief plan. Call your creditors directly and ask them if they will lower your interest rates and/or waive late or over-limit fees to reduce your balances.

Credit counseling

A reputable credit counseling provider can help you find a debt solution that fits your personal financial situation. These non-profit consumer agencies offer free counseling sessions, which include a budget evaluation, online, via phone or face-to-face. They assess your total financial picture to make recommendations accordingly, and guide you towards a customized solution. Depending on your situation, they may be able to enroll you in a debt management program with lower interest rates and fees, to help you pay off your debt faster than you may be able to on your own.

InCharge Debt Solution's debt management program is a good alternative to debt consolidation. With debt consolidation, the consumer consolidates their debts into one monthly payment by taking out another loan to cover several smaller debts. Typically, debt consolidation requires additional fees and interest rates can be high. With a debt management program, the credit counseling agency consolidates your payments, so you still make one easy monthly payment without borrowing more money. Additionally, you may qualify for waived fees and lower interest rates.