Montana Department of Justice
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Struggling with debt? You have options.

We recommend you first meet with a credit counselor to determine which course of action is best for you. There may be help available from an attorney, a debt management company or a debt settlement company.

Debt Management When you work with a debt management company, you make one monthly payment to them instead of multiple payments to each creditor. The debt management company then makes payments to your creditors on your behalf. Debt management companies offer a variety of financial education programs and may be able to obtain other benefits from your creditors such as lower interest rates, lower monthly payments or having your account marked as current.

It can take several years to completely pay off your debt under a debt management plan. During that time, you may be required to close all open credit accounts and not open any new ones. You will generally have to pay a monthly fee to cover the debt management company’s services.

Any company that offers consumer debt management plans to Montana residents must be licensed by the Office of Consumer Protection. This license does not mean the Office of Consumer Protection endorses, supports or recommends any credit counseling service. It simply means the company has met the minimum legal requirements to do business in Montana.

Search for Licensed Debt Management Companies

Debt Settlement (Debt Negotiation/Debt Arbitration)
Debt settlement is a way to decrease debt in which the debtor and the creditor agree upon a reduced balance that is considered payment in full. Consumers can arrange their own settlements by using advice found on this and other websites. You can also hire an attorney to act on your behalf or you can use a debt settlement company. You should be aware that no matter which method you use, you may have to pay more in taxes on your next tax return as a result of negotiating a lowered debt balance. Debts forgiven in excess of $600 are considered reportable income by the IRS.

There are other risks associated with debt settlement companies. If you have stopped paying down the balance on your debts, even if on the advice of your debt settlement provider, the following could occur:

• Damaging information may appear on your credit report
• You may have difficulty obtaining credit in the future
• Your creditors may sue you in court and you may be responsible for any legal fees you accrue
• Your wages may be garnished

Debt settlement companies operating in Montana must be registered with the Office of Consumer Protection. A registered debt settlement company is not supported or recommended by the Office of Consumer Protection. A registered debt settlement company has met the minimum legal requirements to provide debt settlement services to Montana residents. If you choose to work with a debt settlement company, it is critical that you read and understand the entire contract before signing.

Pre-Bankruptcy Credit Counseling
Some credit counseling services provide pre-bankruptcy credit counseling. This kind of credit counseling is usually required in order to file for bankruptcy. Agencies that provide this service are licensed by the United States Department of Justice. A list of licensed credit counseling agencies is available here.

Additional Resources:
Federal Trade Commission
FTC Facts for Consumers: Coping with Debt
Fiscal Fitness: Choosing a Credit Counselor

Debt Management:
Montana Consumer Debt Management Services Act

Debt Settlement:
Regulation of Debt Settlement Providers


Office of Consumer Protection
P.O. Box 200151
Helena, MT 59620-0151
Phone: (800) 481-6896 or (406) 444-4500
Fax: (406) 442-2174