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Third-Party Collection, Debt Settlement, and Credit Counseling

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 are available to consumers that offer to arrange settlements of debts with creditors or collectors for a fee. Normally, companies will offer to pay off debts with lump sum payments before saving up for a settlement.

Credit Counseling- Organizations set up to advise on money and debts, help create a budget, develop debt management plans, and offer money management workshops.
The NFCC offers guides to connect with a certified credit counselor to help review financial goals a budget & create a personalized financial plan.
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