Debt relief companies will manage your relationship with your creditors in order to negotiate your debt and reduce the amount of money you owe. Essentially, you agree to stop paying your creditors and instead, deposit money into an escrow account managed by the debt relief company each month.
As you continue to miss payments, your creditors will continue to lose money and may be willing to settle for less than what you owe. But not all creditors will work with debt settlement companies, the FTC and the CFPB warn. Missing payments will also have a negative impact on your credit score.
Debt relief companies cannot help with debts that are secured with collateral, such as auto loans or home mortgages. They also cannot help with federal student loans or state and federal taxes.