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Debt Settlement

On top of federal debt management rules, a number of states have passed additional laws to protect consumers from unethical debt management practices.

Mississippi passed the Mississippi Debt Management Services Act to govern how debt management organizations can do business in the state. However, the legislation was recently repealed by the current administration, leaving consumers to exercise extra caution. 

Key Points To Consider Before Enrolling


Pick a debt management service provider that is licensed to do business in Mississippi. Look for the words "Licensed Debt Management Service Provider," in their advertising.

Written Agreement

Before you sign a debt settlement agreement, make sure all the terms are laid out in plain, understandable language. Ask for a complete description and breakdown of the services they are going to provide as well as any fees they charge. A reputable, transparent company will also provide, in writing, the address and telephone number for the Mississippi Department of Banking and Consumer Finance in case you have inquiries or complaints.


Debt settlement companies are allowed to charge fees for their services but not until you understand and agree to them in writing. Never pay more than a $75 set up fee and/or a $30 monthly service fee. And do not pay for anything upfront. For example, it is illegal for a debt settlement provider to charge fees over the telephone before they begin the actual work of reducing your debt.


A debt management service provider should be holding a surety bond of at least $50,000 or have filed cash, government bonds or a certificate of deposit of same amount in trust. That ensures the money you send each month is secure and guaranteed to be used to lower your outstanding debt, regardless of what happens to the company.

Distribution Of Funds

Pay close attention to the payment terms in your contract. The Mississippi Debt Management Services Act provides that any money you send to the debt settlement program should be distributed to your creditors within 15 days of receipt. Also, any late fees or penalties imposed on you by creditors for misdirected funds or other errors should be remedied by your debt management provider – not you.

Credit Counseling

While the economy in Mississippi shows signs of growth according to a July 2013 report by Gov. Phil Bryant, in the face of otherwise grim statistics, some consumers may want to consider credit counseling in order to help manage their high debt load and improve their financial situation. Mississippi consumers with continuing debt problems will benefit from the discipline, skills and credit knowledge offered by approved credit counselors.

Industry experts agree that credit card debt stems from a lack of payment discipline. “Many people make the huge mistake of only making minimum payments,” says Howard Dvorkin, CPA, and author of "Power Up: Taking Charge of Your Financial Destiny."

He adds, “Credit Counseling can be very helpful to people who have high interest credit card debt. I always recommend that the first step should be a call to a creditable credit counseling agency for a free assessment.”

How It Works

Credit counseling is designed to provide consumers with money management advice, budgeting help, financial educational courses and, if necessary, a personalized debt management plan consisting of a negotiated monthly payment amount arranged by the counseling agency.

In a debt management program, the agency may be able to negotiate lower total monthly payments by arranging lower interest rates or extended loan terms for the consumer. The consumer typically deposits money each month with the agency and the agency disburses payments according to arrangements made with creditors. The goal is to lower total monthly payments to help the consumer better manage their monthly budget, but the debt does not disappear; it must be paid off. While most credit counselors are non-profit, they may charge fees for their services and/or may receive support from creditor companies.

Debt management companies in Mississippi must register with the Secretary of State, pay annual fees, hold a $50,000 surety bond and meet other requirements. According to the Federal Trade Commission, “Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate non-profit credit counseling programs.” They provide a  list of useful questions and other consumer advice that’s helpful when selecting an agency. 

Where To Find Help

The Mississippi Department of Banking and Consumer Finance provides a list of licensed debt management companies authorized to serve consumers. The U.S. Department of Justice (DOJ) provides a helpful list that’s intended for consumers who are required to have counseling as part of a bankruptcy filing. This list shows approved consumer credit counseling companies authorized to provide assistance in Mississippi. If you are planning to file for bankruptcy, you must use a company from this list.

You may also find information by searching the Better Business Bureau (BBB) for Mississippi credit counseling businesses where you’ll find BBB-accredited business listings and reviews.