What Questions Should Be Asked of a Debt Relief Company?

Consumers who are trying to get their finances in order may seek out the assistance of a debt relief or debt management company. When seeking assistance for debt relief, it is important to choose a company that has the consumer's best interests in mind. Knowing what questions to ask can provide customers with the best knowledge of the company to choose the one that is right for their needs.

What is the Company's Structure?

Knowing whether the company is a nonprofit or for-profit organization can help a consumer determine if the program will fit her needs. A nonprofit organization is in business to help consumers get out of debt; while a for-profit company is in business for just that, to turn a profit. While both types of companies can help get their customers out of debt while saving money in the process, fees offered by nonprofit companies are generally lower. Both types of organizations will charge a fee for their services, but nonprofits also receive donations and grants in order to cover overhead costs. The customer should also inquire if the company is licensed to do business in her state of residence.

How Does the Payment Plan Work?

Before deciding on a debt relief company, the consumer should know exactly how the repayment plan will work. He should ask questions regarding how the payments are distributed to creditors, how much of his payment will go to the company as a service fee, and how long it will take to pay off the debts under the plan. The customer should also learn what the interest rates will be under the plan, if there is an option to pay additional payments, and what debts are eligible for the program.

Can I Leave the Program Early?

The customer should also ask the debt relief company if the program has the option for an early payoff or if it is possible to exit the plan in the event that a need arises. If the payments are causing a financial strain on the customer's budget, she may choose instead to file for bankruptcy protection. A customer may also receive an unexpected windfall such as an inheritance or a bonus from her employer that will allow for an early payoff. A company with the consumer's best interests in mind will allow for either option.