Debt Settlement

How to Choose a Debt Settlement Company

How to Choose a Debt Settlement Company

Is the debt settlement company properly screening and qualifying you?

Debt settlement companies know which clients will complete the program and save the most money by conducting a short qualification process. In order to gauge whether or not you are a suitable candidate for debt settlement, though, they will need to inquire about your situation. Make sure they are asking sufficient questions about your situation.

What will the debt settlement program cost you?

Take into account both the monthly payments toward your debt as well as the fees the debt settlement company will be charging you to perform their service. A good debt settlement company will work with you on making the fees something you can afford. Anything higher than 15% of the total debt that you owe is considered to be over the industry average. If the fees are too high, ask the company if they recommend any other options for you to seek, such as references for a local bankruptcy attorney.

How long will a debt settlement program take?

A typical debt settlement program takes between 2.5 – 3 years if you can afford a sufficient monthly payment.  If a debt settlement company tries to insist that a 4 year program will save you money, they are providing false information. The shorter the time span, the more money you will save, but the higher your monthly payments will be. For example, if you were to pay off an auto loan in three years instead of four years, your monthly payments would be higher but you would be saving a year’s worth of interest fees.  Remember, credit repair will not happen over night and there is no magical solution to erase debt.

How much money is the debt settlement company claiming they can save you?

The majority of debt settlement companies profess that they have the ability to save you 40-60% of the total debt you owe. In some cases, reaching a 40% settlement is not unrealistic. However, you must understand that the amount of money that you can save through a settlement program depends heavily on who you creditors are. In the credit card industry, it is a fact that there exist a number of creditors such as Capital One and Discover who are more prone to forward accounts to attorneys, which will increase your settlement percentages.  If a settlement company tells you they can save you 60% of the total debt that you owe, they are painting an unrealistic, best case scenario picture in which they settle every one of your accounts for 40% of the owed amount. Be sure that every company you consult is giving you a realistic portrayal of your situation once they know what creditors you are in debt with.

Is the debt settlement company a member of the BBB or IAPDA?

Is the debt settlement company a member of the Better Business Bureau? Do they have IAPDA certified debt negotiators who will understand the ins and outs of your situation in order to negotiate the best deal with your creditors? You can check for BBB info online at www.BBB.org.

Does the debt settlement company offer any kind of guarantee?

Does the debt settlement company offer any guarantee of their service? If so, what is the guarantee and what are the terms of service? If your debt settlement company cannot settle your accounts with your creditors, you should not be responsible for paying any fees, and if you sent in a fee, it should be refunded. Also, if a debt settlement company promises that your credit score will remain unharmed, be aware of them. In order to achieve debt settlement, your credit score will have to go down before coming back up and reaching new highs; it’s the price you pay to get out of debt, avoid bankruptcy and start credit repair.

Does the debt settlement company have success stories and references of people they have helped?

Are there any client success stories or testimonials on their website? If the debt settlement company is a member of the Better Business Bureau, these testimonials are true and are much more reliable than those debt settlement companies that are not.

Does the debt settlement company offer bankruptcy assistance?

Does the debt settlement company offer any type of bankruptcy assistance if you are not an ideal client for debt settlement? If they determine your situation to be beyond their assistance, and they are willing to recommend a local Bankruptcy Attorney, then they likely have your best interest at heart.  If you receive a reference for a local bankruptcy attorney, they will assist you with any bankruptcy questions you may have as well as explain how to file for bankruptcy, types of bankruptcy and bankruptcy laws.

Is the debt settlement company listed with their local Chamber of Commerce?

Check to make sure that each debt settlement company you seek to work with is listed with their local Chamber of Commerce. Companies listed with the Chamber of Commerce are more likely to conduct business ethically and properly than business not listed with their local Chamber of Commerce.