So you want to get of debt? Great! There are a lot of companies out there, especially ones who deal with the process of debt negotiation. Debt negotiation works differently than debt repayment. You will pay a settled amount on the balance you owe rather than paying the full balance over time. If you choose to go this route, it’s probably more beneficial to work with a professional than it is to do it yourself so to speak. How do you know which company to choose though? How do you find a company that won’t scam you out of money that you don’t already have? Let’s take a look at some things you can look for in a company that can save your bacon so to speak.
Firstly, let’s clarify what a debt negotiation company actually does. According to the Debt Settlement Industry Standards document of 2008, it’s acknowledged that debt negotiation is a viable option to bankruptcy. These companies give consumers relief from debt by using the consumer’s own funds which are saved into a separate account and used to negotiate a settlement on balances owed. For example if the consumer owed $12,000 on a line of credit, the company could negotiate a settlement of $6,000 which the consumer would pay out of the savings account they have been putting money into.
The debtor can choose to negotiate the settlement themselves, but most find they have better luck going through a company that has experience dealing with creditors. When choosing a debt negotiation company, it’s strongly advised to perform your due diligence before signing any paperwork. The company should uphold itself to a professional level of integrity and be very transparent in it’s dealings both with consumer and creditor. They should explain what they can and cannot do for your individual case, likewise they should not accept a case that they willingly know they won’t be able to work on.
The following are red flags that you should look for when it comes to dealing with a debt negotiation company. No established policies or procedures, an ineffective way to deal with it’s customers (look at the Better Business Bureau to gauge the number of complaints), the company doesn’t provide services that are stated in the contract, giving unrealistic timeframes for debt payoff (a promise to pay of $100k in debt in 3 months for example), promising a very low settlement amount, 50 to 70 % is typical, anything lower is unlikely, charging unreasonable fees for their services, provision of an escrow account for the client, this is highly unethical and leaves the door wide open for potential fraud and embezzlement.
Consumers can find relief from their debt with the right company, educate yourself on what’s best, and if something doesn’t seem right with a company, then it’s best to move on, either to another company or to another option such as debt repayment or bankruptcy. As with all things, make sure your research is thorough and you won’t have any issue trying to find a company that fits your needs for debt relief help.
