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Debt Settlement

If you are overwhelmed by your debt your options are limited. Debt settlement may be just the tool you need to get you back on the path to financial well-being. There are consequences to engaging in debt settlement, including a negative impact on your credit score and any debt forgiven may be considered as taxable income by the IRS.

North Carolina Laws

North Carolina statutes have specific rules regarding debt settlement or “debt adjusting” as they refer to it. It's best to avoid a person or business that offers debt settlement services for a fee, especially if that is all they do. What you are looking for is an organization that, in addition to debt settlement, provides education, credit counseling and debt management services.

In such cases, a nominal charge is allowed that cannot exceed a $40 set-up fee and 10% of the monthly payment made -- not to exceed $40 per month.

Be Prepared

Familiarize yourself with your options and North Carolina's rules. This information will enable you to make an informed decision and also help you to avoid unscrupulous individuals or organizations who would take advantage of you in a time of financial crisis.

Credit Counseling

North Carolinians who are in debt and struggling to pay their bills often turn to credit counseling to help get back on their feet and learn financial strategies for long-term success.

"In North Carolina, the Department of Justice is the licensing organization for consumer credit counseling agencies. A good credit counselor will evaluate your credit debt, income potential and help you create a plan to reduce your debt in the manner that will cause the least damage to your credit," according to the NC State University Extension office.

Be sure the organization you select is licensed and has no pending consumer complaints. A list of approved agencies is maintained on the local level by each of the three North Carolina Judicial districts.

Steps To Succesful Credit Counseling

Contact An Agency 

If you live in the Triangle or Eastern North Carolina, you are in the Eastern North Carolina District. Residents of the Triad and Central North Carolina, including Winston Salem, are in the Middle North Carolina District.  Those living in Charlotte and the mountains of North Carolina are in the Western North Carolina District.

Ask About Fees

According to the North Carolina General Assembly Statute Chapter 14, Article 56, the fee for credit counseling must not exceed $40. Verify any fees that you will be charged before you sign a contract. If you cannot afford the fee for the counseling, ask for a waiver before making an appointment. According to the U.S. Department of Justice, all credit counseling agencies are required to provide services regardless of ability to pay.

Make sure that you sign up for credit counseling, not a financial management course. Financial education does not meet the credit counseling requirement in North Carolina. 

Communication With Your Credit Counselor

Meet with your credit counselor, which typically lasts 60 to 90 minutes. Some offer phone and internet counseling if you are not able to meet in person. Be sure to provide accurate information about your financial situation.

Follow Through

Work to make lasting changes in your financial situation and keep documentation of all credit counseling services and paperwork in case you need the information in the future. 

After completing credit counseling, you will be given a certificate by the provider. The agency is not allowed by law to charge an additional fee for the certificate. The certificate is valid for 90 days from completion.