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Debt Settlement Companies: How to Find a Reliable Debt Settlement Company

By DebtSettlements.com Staff

When people face large debt loads, they tend to react emotionally to the situation. For this reason, many unscrupulous companies swoop in to take advantage of the emotional vulnerability of the individual, giving them a “solution” that is more expensive than it is worth. Those seeking debt settlement need to use caution, because many companies provide poor services at a steep price, putting the consumer in a worse financial situation than they were in before they started.

Learn the Fees Upfront

One of the primary ways to know that you are working with a quality debt settlement company is to learn the fees upfront. Shady companies will not share this information with you. Consumer debt settlement services do cost money, so find out exactly how much and how often the company will be paid before you sign on the proverbial dotted line.

Companies can either charge performance-based fees, or contingency fees, or per-transaction fees. Look for a company that only gets paid on contingency. This ensures they will work hard for you, because unless your debt is taken care of, they will not get paid.

Learn How Settlements Will Be Paid

A lump sum payment works best in debt settlement scenarios. This ensures that the creditor has the money and your responsibility is covered. However, for many consumers this will not be possible. A payment plan is another option for debt settlements. This involves setting up a trust account with the debt settlement company or another third party. Once that money is saved, the settlement is sent to the creditor.

If you choose the payment plan option, make sure the debt settlement company is clear about your responsibilities during the time when you are saving the money. The debt settlement company must be in close contact with the creditors, and they must explain to you what the creditors are saying, because legally the creditors can send you to collections while you are building those reserves.

Ask for Proof

A reputable company will be able to provide proof of their reliability. Remember that testimonials can be faked, so ask for proofs such as copies of actual settlement letters. Also, look at how long the company has been in business. A company with a long track record likely handles the settlement of debt well for its clients.

Check the Better Business Bureau & TASC

Check with your local Better Business Bureau for complaints against the company. If a company is not registered with the BBB, proceed with caution. When checking with the BBB, look for a company that has been in business for at least five years. Avoid any companies with unresolved complaints in their local BBB or who have just recently entered the field. You are going to be trusting the debt settlement company with your finances, so you need to be wary of newcomers.

Also check to see if the debt settlement firm is a member of a major association like the The Association of Debt Settlement Companies (TASC).

Avoid Empty Promises

No company can promise or guarantee that you will be able to settle. The decision to settle lies solely with your creditors, and they may not be willing to bargain. If a company guarantees they will settle, they are not being truthful. Money-back offers, on the other hand, are often legitimate.
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