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Debt Settlement

Debt settlement is one way to climb out of escalating debt and avoid bankruptcy by reducing the amount of money owed to your creditors. A qualified and reputable debt settlement manager can negotiate with your creditors to get your balances down to a more reasonable figure. Once that happens, you’ll stop paying the debts yourself and instead make one monthly payment to the debt management company. They would assume the responsibility of distributing your money to each of your creditors until the balances are paid. 

Choose Wisely: Information To Know Before You Sign

To protect consumers, debt settlement companies operating in West Virginia must follow specific laws. A few things to keep in mind: 

Registered & Bonded

Debt settlement providers must be registered with the state, pass criminal background checks and have good credit histories. They also need to obtain a $50, 000 surety bond from a highly-rated insurance or bonding agency and keep it for at least two years if the company stops providing services in West Virginia. 

Free Analysis

Debt management companies should provide a free, professional analysis of your financial situation and supply information on managing personal finances. This determines whether a debt settlement plan is your best option and if you can actually meet the payment obligations. If not, they need to tell you about other options, including bankruptcy. 

Contract Language

Any agreement you sign must include a clear and conspicuous breakdown of the entire debt settlement plan, including an explanation of fees, charges and your payment schedule. You can also cancel the agreement any time, for any reason, without penalty. If you do cancel, you should get back any funds that are still in trust within seven days. 


Set up fees and monthly maintenance fees should not exceed $50 and you should not be charged until after the debt settlement plan is in motion and your debt manager has made at least one payment on your behalf. 

Customer Service

You must be given a toll-free telephone number for the debt management company so you can speak with certified debt counselors and customer service representatives during regular business hours. If there is a website, the name of the company, its key principals, and the business address must be prominently displayed.

Credit Counseling

What it is

The extent of credit counseling can vary based on need. Credit counseling is about education and making a plan. The education involves learning about debt, managing debt and the options available depending on your need as well as how to budget. After you understand better what is going on then you work with the credit counseling organization to develop a plan of action to help you get your debt under control. The depth of the planning and level of involvement of the credit counselor will depend on your need. You may just need education or you may need to have the credit counseling organization negotiate on your behalf with your creditors.

What You Can Expect

Understanding debt and realistically assessing your situation and developing a plan is seldom pleasant, but at the same time can go a long way to help you reduce the stress caused by spiraling debt. Often people are ashamed of their debt and avoid doing anything about it. This is the worst thing you can do. Taking action, developing a plan then moving forward are all empowering things that put you in charge of your debt, not the other way around. Following through on the plan may be very challenging but it’s the bitter pill you must take to heal your financial ills.

West Virginia Residents Only

West Virginia does not have any significant legislation regarding credit counseling agencies. This puts more of the burden on you to do your homework. The Department of Justice has a list of approved credit counseling agencies that should help narrow your search. Before you make your final decision to enter into an agreement make sure you get everything in writing. The document should very specifically state what services will be provided, how you may cancel a contract and any fees.

Knowledge and Planning

Credit counseling is a good first step to financial recovery. You need to better understand debt and how to get out of it. You will need a plan you can follow to get out of debt and to know what will be required from the credit counseling agency.