How to Choose A Credit Card Debt Settlement Company

Finding a legitimate debt settlement company among the fraudulent ones can be difficult. Debt settlement companies have terrible reputations and many are fly-by-night operations set up to defraud desperate people eager to discharge their debt. Fortunately, the Federal Trade Commission has created a list of things to look for and things to avoid when shopping for a debt settlement company. Consider these items before you sign anything.

Instructions

1

Start looking for a legitimate business through the Better Business Bureau's website. Seek a company that's a bureau member in good standing: Don't take the company's word for it. In addition, make sure the company has written policies and procedures; services the debt itself rather than through a third party; and has an open-door policy for regulators.

2

Check the agency's willingness to disclose information. For example, does it have written disclosure of its fee structure? Check whether the agency discloses that credit agencies may continue to call even though you're involved in debt settlement; that debt settlement is likely to damage your credit; and that the agency cannot guarantee results. Some credit card companies will sue rather than accept a settlement. If the agency does not disclose this information it's likely hiding something.

3

Avoid companies with unreasonable promises or unreasonable fees. Avoid companies that promise you will be free of debt in an amount of time that seems too good to believe. Avoid companies that charge unreasonable fees. Many fees are between 14 and 18 percent of the debt to be discharged. Never pay more than 30 percent. Also avoid companies that "escrow" your money, saving up a given amount before they begin paying your creditors. You and your creditors might never see that money again.