Plenty of companies are actively promoting their ability to help consumers negotiate more manageable debt repayment plans. This is a way to get out of debt without completely defaulting on your credit obligations. At the same time though, not all of these companies have a solid reputation.
These tips for researching debt settlement companies will help you find credit debt relief with effective companies you can trust.
What Debt Settlement Companies Do
In situations in which unsecured personal debt has become difficult to pay, working with a debt settlement company can be a source of credit debt relief. The good ones offer free consultations during which they review your finances to determine if you’re a good candidate for one of their settlement programs.
In cases in which you are deemed to be, you’ll open an escrow-like account with the company into which you’ll deposit money as frequently as possible. When the balance of the account is sufficient to offer payoff deals to your creditors, a representative of the company will try to negotiate a one-time payment in full agreement for an amount less than you owe if the creditor will agree to deem the account paid in full.
Creditors will often agree to this because they know if a respected settlement company has taken on your case, your next option is likely to be filing for bankruptcy protection, in which case they might have to settle for no payment at all.
So, how do you find a respectable debt settlement company?
Read on.
Confirming a Company’s Reputation
The Consumer Financial Protection Bureau keeps a log of debt settlement companies against which complaints have been lodged. The key is what the company did in response to the complaint. The finest organizations have few claims and step up when a claim is filed.
You can also check with the office of the attorney general in your state to see what kind of rep the company has there. The Better Business Bureau (BBB) is another source of reputational information to consider. The best companies are rated at least “A” or better by the BBB.
Online reviews can be telling as well. TrustPilot, TrustLink, Yelp and Angie’s List are good places to learn what the general public thinks of an organization you’re considering. Another source of reputational information is the American Fair Credit Council, which is a watchdog organization for the industry.
Attributes For Which to Look
This form of credit debt relief can take anywhere from three to five years to complete — depending upon your ability to save money to pay off agreements and the amount of your qualifying debts.
The law also forbids these firms from invoicing you for their services until they’ve settled a debt on your behalf. Any company pressing you for upfront fees for debt settlement is operating in violation of the law. Some of them try to get around this with “administrative fees, signing fees, consultation fees and the like. Any company asking you for money upfront is to be avoided.
Strong companies have pre-exiting relationships with creditors and can cut through the red tape to get the most expeditions settlement possible. A legitimate company’s reps, like those from freedomdebtrelief.com, will tell you up front what to expect from the process as well as what they can and cannot do.
Keeping Yourself Safe
When researching debt settlement companies, beware of any firm that guarantees results, jumps straight to trying to get you to sign up without reviewing your situation, or tries to push you into signing with them. These are signs the company is more interested in taking your money than helping you resolve your debts.
And finally, the best credit debt relief companies will always make sure you’ve considered all available debt relief options before offering to sign you into one of their programs.