How to Compare Debt Settlement Companies

If you've decided that debt settlement is the right solution for your debt problems but aren't sure how to navigate the process, you may choose to enlist the help of a debt settlement company. A number of legitimate organizations can help you to settle your debt but there are also many companies that are set up to scam unsuspecting consumers. When researching debt settlement companies, there are a few things you need to consider to find the right one for you.

Instructions

1

Understand the fee structure. In exchange for their services in helping to negotiate your debt, debt settlement companies can charge numerous fees, which can be quite confusing. Some companies may charge a flat rate per month, as well as a percentage of the total balance of the outstanding debt or a portion of the amount the debt that is forgiven. There may also be an initial sign-up fee and additional monthly service fees. Before handing over any money, request a written breakdown of the company's fees. Be cautious of any organization that does not have this information readily available or asks for an upfront deposit.

2

Ask specific questions regarding their services. A reputable debt settlement company should be able to create a plan unique to your situation that will detail how your money will be spent and what exactly will be done for you. You need to know where your money will be held, when and how creditors will be approached, how to handle counteroffers, what to do if you are sued. The firm should be able to provide you with detailed information rather than generalized answers.

3

Verify their credentials. Check with the Better Business Bureau to see whether the company is an accredited member and whether there are currently any consumer complaints against the firm. If the company claims that its counselors are certified, find out by whom and what it is they're certified to do.

4

Check the laws regarding for-profit debt management firms in your state. Some states, including Georgia, New Jersey, Mississippi and New Mexico, prohibit for-profit organizations from working in their state. If a company has contacted you and you find that it's doing so illegally, then under no circumstances should you consider contracting the company's services.

5

Ask the company about other services, such as credit and debt counseling, or bankruptcy referral. A reputable company should evaluate your situation and tell you whether debt settlement is even the right choice for you. If a company dismisses your request for additional services or referrals and refuses to offer you alternatives, then the company clearly does not have your best interest at heart.

6

Ask for a written guarantee of the company's services. If the company is unable to do what it says will be done, then you want to have a guarantee in writing that your money will be returned to you. If the company refuses to offer you such a guarantee, you might be better off attempting to settle your debts on your own.