Third-Party Collection – A third-party agency or company that collects unpaid debts on behalf of a creditor. The creditor (the original person or company owed the debt) hires a collection agency to pursue the debtor and collect the outstanding balance.
Debt Settlement – The process in which a debt is settled for a lesser amount than what is currently owed with promise of payment in full. Debt settlement companies offer to arrange settlements of debts with creditors once a certain amount has been accumulated in a designated account.
Credit Counseling – Organizations set up to advise on money and debts, help create a budget, develop debt management plans, and offer money management workshops.
To learn more about Credit and Debit/Consumer advice, visit: the Federal Trade Commission website at: https://consumer.ftc.gov/credit-loans-and-debt/credit-and-debt
To learn more about prohibited fees and specific provisions of debt settlement, visit the Federal Trade Commission website at: https://www.ftc.gov/system/files/documents/plain-language/bus72-debt-relief-services-telemarketing-sales-rule-guide-business.pdf
To learn more about debt collection, visit the Consumer Financial Protection (CFPB) website: https://www.consumerfinance.gov/consumer-tools/debt-collection/
For more information visit the National Foundation for Credit Counseling (NFCC). The NFCC features various articles related to debt and can also assist in connecting consumers with a certified credit counselor to help review financial goals, a budget, and create a personalized plan. For more information visit: https://www.nfcc.org/