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How Do I Pay Bills With Debt Settlement Programs?

When using debt settlement programs to reduce the amount of debt you owe, you will pay the bills that qualify for the program to the settlement company, not your creditors (as you’d usually do).

A typical large debt settlement company will set up a trust account on your behalf with a 3rd party organization like a bank. Once you and your debt counselor determine a payment plan for you, you will make that payment directly into the trust account instead of paying your creditors directly.


The way the debt settlement programs work is that you stop paying your creditors and instead stockpile money in your trust account until the amount is enough to approach your creditors and negotiate a debt payoff. If your debt settlement company tells the creditor they can pay off a large amount all at once, the creditor is more likely to agree to eliminating a portion of what you owe. It’s part of the debt negotiation process.

Is the trust account safe?

You need to be comfortable with the trust account provider that your debt settlement company will use. Be sure to get the name of the company and research them as well before signing up for a program. In general, the large established debt settlement companies will use large trust account providers.