Debt Resolution
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Financial education and referrals—so you can choose with confidence.
Is Debt Resolution Right for You?
Money Student is a financial education and referral platform. Our goal is to help you understand how debt resolution works and, if you ask us to, introduce you to independent providers that offer these services. Be cautious of any company that requests up-front fees before a settlement result; debt settlement fees are typically charged after a settlement is reached and a payment is made toward it (Per the FTC Guidelines). We want to make sure you don’t just enroll in these programs, but you succeed!
What is Debt Resolution?
Debt resolution (often called “debt settlement”) is a strategy where a client/or third-party firm negotiates with unsecured creditors to accept less than the full balance. If you enroll with a provider, you typically make one monthly program deposit into a dedicated account at an FDIC-insured institution in your name. Funds accumulate and are used to make lump-sum settlement payments, usually one creditor at a time. Typically, you get to approve or deny every settlement before it happens. Once approved the debt is then settled and this process repeats until the enrolled accounts are resolved.
Our Debt Resolution Program Consists of 3 Simple Steps
Build/Save
Build savings within your trust account for the purpose of settling debts.
Negotiate
Use the money that builds in the trust account to settle your debts one at a time.
Settle
Client approves settlement and we repeat the process until all accounts are settled.
“Resolution + Consolidation” Hybrid
Some consumers explore a personal loan to pay off negotiated settlements more quickly (instead of waiting for funds to build). This can shorten timelines but introduces a new loan with its own rate, term, and underwriting. Suitability depends on credit profile, APR, total cost, and cash-flow.
Things to keep in mind before choosing Debt Resolution
Who This May Fit
• You’re already behind or expect to fall behind on unsecured debts.
• You need a lower monthly outflow than making all current minimum payments.
• You’re comfortable managing collection activity during the process.
Who This May Not Fit
• You’re current on all accounts, have strong credit, and want to keep cards open.
• You can afford all minimums or qualify for a lower-rate refinance/DMP.
• You don’t want potential credit impact, fees, or legal risk.
Key Considerations (Know Before You Decide)
• Fees / No Upfront Fees: Reputable firms do not charge fees before a settlement is reached and you’ve made at least one payment on that settlement. Get all fees in writing.
• Credit Impact: Late payments and “settled” notations can harm credit and remain for years.
• Collections & Legal: Creditors/collectors may call, send letters, or may sue. Not all creditors will negotiate.
• Taxes: Forgiven debt may be taxable (e.g., IRS 1099-C). Speak with a tax professional.
• Dedicated Account: Funds are held in an account you control at an FDIC-insured institution; you can withdraw at any time.
• Variability: Results and timelines vary by creditor, state, and deposit amount.
Consumer Protections & Contact Limits
Original creditors can generally contact you while they still hold the account. Once placed with a third-party collector, the FDCPA provides rights and limits harassment. Many providers use letters of representation to help direct communications to them. If you believe your rights are violated, consult an attorney.