Editor’s Note: As part of a special project on The PerkStreet Blog, we’re offering free question and answer columns on Saturdays with Customer Columnists Clint and Katy Davis of Davis Coaching. If you have a question you’d like to submit to get advice from these financial coaches, email it to editors@perkstreet.com.

Dear Clint and Katy,
Do you recommend working with debt management companies? Can they actually help you reduce and/or get out of debt?

-Jereme, AZ

Dear Jereme,

My advice is to stay away from them! Each year, the Federal Trade Commission receives more complaints about these companies than almost any other type of business. Most are poorly run fly-by-nights, or just plain scams.

Debt management companies don’t have a magic formula to make your debt go away. The only way your creditor will accept less than you owe them is if you are far behind on your payments and they’re afraid they won’t receive a dime. And by the way…you don’t need a debt management company to negotiate a favorable debt settlement.  We teach our coaching clients how to handle debt settlement negotiations all the time, without spending the hundreds or thousands you’ll pay a debt management company.

But the bigger issue is that you need to change your behavior when it comes to handling money. If you don’t begin to take responsibility for your situation, get control of your money, start living living on a budget, and living on less than you make, you’ll be in debt for the rest of your life. That’s what sets financial coaching apart from debt management companies or financial planners. We walk people through the process and provide massive accountability to help people re-train themselves to handle their money properly, get debt-free, and stay that way for life! Debt management may seem like an easy, quick-fix on the surface. However, even if you do work with one of the (very) few reputable companies out there, they can’t do anything to help you change the behaviors that got you into debt in the first place.

-Clint

Dear Clint and Katy,

Thank you so much for your column on Perk Street. My Son required some surgery a few months back and, even though I have insurance, our out-of-pocket expense came to $4,000. I have asked the hospital for a discount if I pay all at once. The hospital finance office said they never accept settlements on accounts. They only accept payment in full or will set up a payment plan, but will never take less.

Do you think this is truly their policy or was it their standard response to everyone when they inquire at first? Do you think I should try again with someone else in the office, or is it possible that are simply unwilling to negotiate? Thank you for any advice you can give.

-Maria, TX

Dear Maria,

First of all, I hope everything is alright with your son and the surgery was a success. That’s the most important thing. And I know you are so thankful that you had good insurance to cover the bulk of the expense.

It may be the hospital’s policy to never accept less than payment in full. In my experience this would be relatively rare, but they certainly have no obligation to negotiate. I would recommend speaking with a supervisor in the hospital’s finance office, and I would recommend speaking to them in person if feasible. That will be the person who may have the authority to negotiate. Before you speak to him or her, sit down with your budget to determine the highest amount you could give them as a settlement. Don’t promise to pay more than you are able. If they are truly unwilling to budge, pay what you can up-front and take advantage of their payment plan option to pay the balance off as quickly as possible (or add it to your debt snowball list).

-Katy

Have a tricky question Clint and Katy can answer about your finances?
Email it to Editors@PerkStreet.com

Clint and Katy Davis are PerkStreet Customer Columnists and founders of Davis Coaching. As financial coaches, their passion is helping people become and stay debt free! Their personalized coaching is designed to help you get your financial life where you want it to be. Like personal trainers for your finances, they can help you develop a specific plan to achieve your goals, and provide the expertise and accountability to get you there. If you’re ready to take control of your financial life, visit Davis Coaching online, check out the Davis Coaching blog, and connect with Clint and Katy on Twitter and Facebook.