What to look for in a Debt Settlement Company

So you have decided to go with Debt Settlement and are now faced with the decision of what company to hire.  

When choosing a Debt Settlement Company there are many things that need to be considered. Below are a few things to take into consideration when hiring one of the many debt settlement companies:       

• The company promises that your unsecured debt can be settled for less than the amount owed. There is no guarantee that any creditor will accept partial payment of a legitimate debt and this should be clearly expressed by the company you choose.

• The company tells you to stop making payments to or communicating with your creditors. What they are not telling you is that if you stop making payments on a credit card account, you will incur late fees and interest that will be added to the total amount you owe, as well as take hits to your credit score.
   
• The company claims that creditors never sue debtors for not paying their debts. What they are not telling you is creditors can and may sue you if you have an outstanding debt of a high amount.
    
• The company claims that they can have accurate negative information removed from your credit report. What they are not telling you is that it is illegal for any company or person to remove negative information from your credit report that is accurate and timely.  It is hard to do in the first place, but if done, it is illegal.
   

Do they ask questions about your current debt situation and review your budget?

The company you are talking to should ask you basic information such as what credit card companies you have debts with, how much you owe to each bank or credit card Company, what state you live in, do you have any recent balance transfers or cash advances? The answers to these questions will tell a legitimate company if you qualify to be in a debt settlement program. If they give you an estimate or say they can help you without asking these questions they are most likely a scam of some kind and if you decide to move forward, move with caution.  

Do they inform you of all the details of their Debt Settlement program?

Companies should inform you of the following:

• The fee charged and payments they make.
• Whether they are a law firm or not. If not, that they may not advise you legally. 
• The details of your personal savings account, if applicable, that will be used for settlement purposes.
• That the settlement program may have a negative effect on your Credit Report?

Does the company charge you based on performance?

All companies have a set up fee and this is acceptable.  However, you should research if their fee is outrageous compared to others. If they are performance based, they will most likely charge you a percent of the money the company saved you. This can be dangerous because you don’t know the amount saved until the end of the negotiations. Try to find a company that can give you a clear amount they will charge upfront.