Legal Question in Credit and Debt Law in California

Re: Credit Card Debt Reduction Organizations

Good question. In short, yes these organizations are legal. The answer to your other questions depends on what this company does. Some of these companies have ongoing relationships with many large creditors with whom they deal on your behalf to lower payments, settle for lesser amounts, etc. In effect, they are just renegotiating your debt. Take their promises with a grain of salt, however. Even if they negotiate down some of your debts, these debts will still show up on your credit report as "settled for a lesser amount". Long story short, if you and your local attorney sat down with all your bills and started contacting creditors and collections agencies, you could work out very similar deals. These debt reduction companies claim they have an advantage because of their ongoing relationships with creditors which may or may not be much of an advantage. I would suggest doing some research on this online first. The Federal government has some very useful sites for consumers. Try www.ftc.gov and maybe do a search on www.firstgov.gov as well and you should find some good advice about these companies.