Question: Jake on Twitter asks how Dave feels about debt management companies. Can they help him? Dave says he'd stay away from them no matter what.
Dave Ramsey's advice: I would stay away from a debt management company no matter what. If you go to the Federal Trade Commission's website, ftc.gov, you will find that the level of complaints on debt management companies is one of the top categories of all things complained to the Federal Trade Commission. In other words, there are a ton of them that are scams and/or incompetent, operate poorly, don't do a good job and so on. That's problem number one.
Problem number two is you need to fix your situation. You can fix it a lot cheaper than paying someone else to do it. The majority of these people collect their fees upfront, and you may or may not get anything from them after they do that. If you're not able to pay your payments, pay what you can and take the ones that you can't pay and begin to work and save to do your own settlement with them as fast as you can.
Debt settlement companies do not simply wave a wand and make your debt go away. The only reason a creditor is going to take less than is owed to them is if they think they're not going to get paid. They don't settle just because it's inconvenient for you to be in debt. They don't take less than is owed to them when you're current with them. After you've not paid for many months, because I'm assuming you couldn't pay and you're six months behind, then they will look at you and settle if they think they can get what you're offering. Always do that in writing, and always—no matter what happens—do not allow them to have electronic access to your checking account, no matter what they say, no matter what they threaten because I will tell you from experience, they lie. They will clean out your checking account. So they get no money unless it's in writing, they get no electronic access, and you settle with them yourself. But I would not use a debt settlement company.