What's the catch when Debt Agency (Relief) offers to save me $5,000?

In summary, I owe roughly $18,800. I have three cards and have been making payments, but I was severely set back by a kitchen issue that my insurance did not cover, so the interest and spending are really not helping me.

They claimed that if I pay off early, there won’t be an early termination fee and I can pay $372 per month for 36 months. I know that closing all three of my accounts will negatively impact my credit score.

However, that only comes with a $13,300 total payment, no further interest, and a manageable $372 each month.

What have I overlooked?
Regards

They’ll likely ask you to stop paying your creditors directly and start paying them instead. They’ll hold your payments in an account while deducting their fees, then attempt to negotiate with your creditors to reduce your monthly payments. The $372/month is probably based on what they expect your creditors to agree to, plus their own fees. However, there’s no guarantee your creditors will agree to this plan, accept missed payments, or agree to a reduced rate. Even after you start working with this company, your creditors can still pursue collection efforts, including lawsuits.

That’s my take on what’s happening.

That is the standard debt relief strategy, and it is a terrible strategy. You can avoid paying the debt company’s costs by handling everything they would do yourself.

Do it yourself rather than hiring someone else to do it if doing so may damage your credit.
Companies that relieve debt are essentially scams.

That’s most likely the case. The issue with these debt negotiating programs is that your creditor is aware of your income and savings. They earn 100% if they file a lawsuit first. All of the costs you have paid are simply taken by the settlement business.

Give a nonprofit debt consolidation organization a call. The business you are collaborating with is giving out bogus promises. You may actually perform all of the tasks they intend to perform on your own. Simply notify your creditors over the phone that you are unable to make payments and request a plan. In addition to possibly lowering your interest rate and taking fewer payments, they’ll cancel your account. Only deal with non-profits if you choose to work with a debt consolidation firm. If not, you might potentially apply for a consolidation loan from your bank or credit union.

For $5,000, I wouldn’t do it. For the next seven years, your credit will be severely damaged.

It simply remains on file for seven years. In a year or two, you can rebuild credit to a respectable or excellent level. most likely merely unable to obtain a mortgage or any other significant loan

You’ll likely be expected to stop making payments, causing your debt to grow due to increased interest and fees. The company typically takes 25% of the total debt as their fee (at least, that’s what my ex’s contract had). Some people only pay 15%, but he’s being taken advantage of. He would’ve been better off just putting all his money toward the debt directly or even considering bankruptcy. Your debt seems more manageable in comparison. Have you looked into transferring it to a zero or low-interest card to help you pay down the principal faster?