Choosing Debt Settlement Companies

Share Debt settlement companies are a dime a dozen on the radio, tv and internet.

Whether the cause of your debt is due to job loss, unexpected medical bills or simple overspending, you are entitled to  work with a reputable settlement company.

So how do you sort out the good from the bad?

If you were looking for a dentist, you would ask your friend who they go to, if they like their dentist and if the costs were reasonable. 

But when it comes to choosing a debt settlement company, you may want to keep your financial situation private.

So the choosing part will come down to you in finding criterias to judge a settlement company.

Here are five things to look for (or avoid) in choosing a company that will work for you. 

First, look for experience. The fly-by-night company that is open down the street from you maybe conveniently located, but it might not have the track record you need to get debt relief.

A good company has been open for more that two or three years and has no issue with proving it. National debt settlement companies are more likely to have been around for years and have better odds of getting you the best settlement plan possible.

Second, check their standing with the Better Business Bureau (BBB). The BBB gathers and reports information on business reliability, provides information on ethical business practices, and is a mutually trusted intermediary between consumers and businesses.

Checking a debt settlement firm with the BBB will give you a good idea if the company is worth working with.

Third, look for debt industry memberships, especially with The Association of Settlement Companies (TASC). Good companies will subscribe to various memberships in the debt settlement industry.

To become a member of TASC the company must adhere to the strictest standards in the industry, and being a member of the TASC is a good indication that the company you're looking at will work hard for you.

Fourth, all debt settlement companies charge fees, but the best companies won't ask you for a flat percentage. A bad company charges a flat rate of 12-15% of your debt. Good debt settlement companies will base their fees on the amount of money they are able to save you.

Check to see if the fees are upfront or billed monthly. Upfront fees can be prohibitive and are a sign of a bad company.

Last, but not least, take your time. It’s natural that once you’ve worked up the courage to face your debt and do something about it, that you want to get the paperwork signed and over with!

Take a step back and make sure that you understand everything about the contract you are signing. Ask all of the questions that you have. Make sure you that the costs are clearly spelled out to avoid confusion. 

Before you start calling, be aware that debt settlement is a process that eliminates your debts but also potentially hurts your credit rating in the process. For that reason, it should only be considered by those who are at the brink of bankruptcy.

Debt settlement companies help negotiate your amount of debt with your creditors.

The settlement company creates a monthly payment plan, based on the total amount of debt you have.

You can find more debt tips here.

Hiring a settlement company is a major step towards living debt free life. However, there are people who would take advantage of your situation and charge a premium for their services.

That's why spending time selecting a debt settlement company is important to you and your financial future.

Back to Debt Settlement