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I see their ads all the time, offering to slash debt in half and such. While I applaud these services for what they are trying to do, somehow they have to make money, or they couldn’t afford to run these ads. Where is the profit coming from.
Appreciate the answers in advance, thanks!
Most of them charge a monthly fee. I don’t think that they are worth it at all and people could use that monthly fee to send it to their credit card companies themselves.
Usually they are paid by the creditors and debtors both. The creditors are happy to pay a fee to someone who will get their money for them rather than take a loss. The debtors are happy to reduce payments and get a structured program to repay several debts into one managable payment.
Everyone is happy with the arrangement. The relief companies are acting a middle men, getting profit they create themselves.
The key with this is that anyone can negotiate with creditors. They can do it themselves and avoid the fees, whether hidden or known. If they do this then they can apply the ‘fee’ money to the payments and possibly end up ahead of the game.
Good luck
There are two ways for them to make money. One is that they charge you a service fee which is included in your payment.
second is a rebate from the credit card companies based on their collections of money from you.