Debt settlement programs are often offered by the for-profit companies. These companies negotiate and convince your creditors to accept less than the full payment amount. A good settlement company can help you turn your finance around quite easily. So, it is essential to choose and work with a company that is best in the industry.
Read along to know about the 6 simple ways through which you can choose a reliable debt settlement company and get back on the right financial track again.
6 Ways to choose good debt settlement companies
In order to find the best debt settlement companies, you need to research and review the following:
1. Company profile: You need to check the profile and service background of the debt settlement companies you are considering. Choose that company which suits you the best.
2. Company accreditation's: These include the certifications that companies have obtained so far, such as their Better Business Bureau report. There are other accreditation's available for businesses, such as IAPDA certification etc. Find out if the company is accredited by The Association of Settlement Companies (TASC).
3. Program fees and costs: You need to find out what debt settlement companies charge. Compare their fees and choose the companies that best meet your needs.
4. Client testimonials: Look for testimonials and feedback given by past clients.
5. Debt negotiators: Ask the company if they have IAPDA certified debt negotiators. This is because IAPDA certified negotiators have a profound knowledge on the industry rules and regulation. They'll be able to handle your case in a better way.
6. False statements: A good debt settlement company will never make fake claims such as:
i. Your accounts can be settled within a week
ii. Creditors don't have any right to sue you
iii. Negative trade lines will be eradicated from your credit report
iv. The company is not regulated by the FTC laws
Last but not the least, ask the settlement company if they offer you some sort of guarantee. Find out what will happen if the company fails to reach an agreement with your creditors.
How much to pay for settling your credit card accounts
Under the new FTC Rule in 2010, settlement companies cannot charge upfront fees for their services until:
(i) The debt settlement company has successfully negotiated, settled or reduced at least one of the accounts you have.
(ii) There is a written settlement agreement between you and your creditor.
Under the Debt Settlement Consumer Protection Act enforced by the State of Illinois, the upfront fee is capped at $50 and the total fees shouldn't exceed 15% of what you save under this program. There are additional states that have passed laws recently governing how a debt settlement company interacts with consumers. The fees you pay under a settlement program depend on:
how much you owe
the number of accounts you have
how much you save by settling bills
How to avoid debt settlement scams
Emergence of shad debt settlement companies has posed a serious threat in the financial industry. These companies help people to get into deeper financial problems. So, if you really wish to repay your bills without getting into bigger monetary problems, then do check out the tips to avoid debt settlement scams.
Avoid paying advance fees to the company: As per the FTC rules and regulations, companies offering debt settlements can't accept financial compensation in advance. They have to successfully negotiate with the creditors and reduce/settle at least one account of the consumer first.
Avoid working with a company without an address: A good company will have a physical address or a proper phone number. On the other hand, a scam settlement company would prefer to talk with you via phone. They would give wrong debt settlement advice without even working on your case.
Stay away from companies that give vague information: This program is not without any flaw. If the company highlights only the positive sides of the program and refuses to talk about tax and credit score, then it is better to stay from them.
Don't work with a very young company: Usually, scam companies can't survive for a long period of time. So, it is better to work with a company that has been working with the consumers for nearly 5-10 years.
Debt problems have become an issue of major concern in the industry. Most of the consumers are seeking help from the settlement companies to get out of debt mess. If you're one of those consumers, then make sure you do proper research and ask the right questions to the debt negotiators before signing the settlement agreement.