For someone struggling with a significant amount of debt, debt settlement is the wiser solution. In fact, it’s the best way out if you want to avoid bankruptcy. Not just this but if you want someone else to negotiate with your creditor on your behalf then you can opt for debt settlement services too. It’s a more viable solution as these companies have more experience and they know better on how to deal with your creditor professionally.
However, what’s more important is to be able to find a reliable and trustworthy debt settlement service provider in your area. You see, debt settlement scams are quite common nowadays. People often fall victim to these fraud companies that make false claims and promises and some just disappear after taking your money. To prevent such a situation, you need to do proper research before hiring a settlement service.
Here’s a step by step guide that can come in handy to you in your search;
1-Understand What Debt Settlement Is And How It Works
Before you start hunting for a reliable debt settlement company, it’s important that you first understand the process in detail and how it really works. For those who are new to it, debt settlement is a financial strategy where you negotiate with your creditor to reduce your debt and in return you have to pay them a lump sum to resolve your debt. This strategy applies mostly to unsecured debts that don’t have any collateral, like;
- Credit card debts
- Medical bills
- Personal loans
- Private debt loans
Even though debt settlement provides financial relief, it comes with a few downsides too. For example, it can negatively impact your credit score and could also involve fees. You just have to weigh out the pros and cons first before making any final decision.
2-Try Local Online Search
If you want to find a service provider near you, it’s best to start with location specific online search first. You can use platforms like Google and use search queries like;
- Debt settlement near me
- Debt relief agency in (your city’s name)
- Best debt negotiation company (your city’s name)
You can also use Google Maps, Yelp and platforms like BBB (Better Business Bureau). This way you won’t just be able to find debt settlement service providers in your area but you’ll also be able to compare them, see their ratings and reviews and their locations as well.
3-Verify Their Licensing And Check For Accreditation
Finding a debt relief company in your area isn’t difficult but finding a reliable one is. You have to ensure that the company you are hiring is worth your time and money. For this, it’s important that you ask the company for their license to operate in your state. Also, ensure that the company is accredited by authorities like the
- Better Business Bureau
- The American Fair Credit Council (AFCC)
- International Association of Professional Debt Arbitrators (IAPDA)
4-Compare The Services And Fee Structures
Not all settlement companies will provide you the same quality of services. It’s best to first find the best ones, make a list of all of them and then compare the following factors;
Fee Structure: Most of the times, companies charge a certain percentage of the settled debt and some require monthly payments. You should always choose the company that doesn’t require any upfront fee. If a company does so, it’s a red flag and you should avoid hiring them.
Track Record: Compare the track records of each company and choose the one with the higher number of successful settlements.
How Long Have They Been In Business: Experience does matter a lot when it comes to a debt settlement negotiation. You should always hire the company that has been in the business for a long time.
Transparency: Compare contracts and check which company is being more honest and transparent with you. A legit debt settlement company will always provide you with a detailed contract that has everything mentioned in it including the timeline of the settlement and the consequences of it.
Customer Service: Compare the customer service of each company that you’ve shortlisted. You should always go with the one that’s responsive and takes customer service seriously.
5-Schedule Meetings
Scheduling a consultation with the companies that you’ve short listed is a great step. We understand that you are in a rush but choosing the right company is a time taking task and you should invest proper time in this process. Most reputable debt settlement companies offer free initial consultation and you can take advantage of this opportunity to ask them questions, discuss your financial situation and understand all the pros and cons of this process. It’s best to prepare a list of your questions before the consultation session so that you know what you are getting into.
Signs Of A Legitimate Debt Settlement Service
Choosing a legitimate debt settlement service is crucial especially when you are already struggling financially with mounting debt. There are companies that offer genuine help like Mountains Debt Relief. We offer the most professional debt settlement services in town so that our customers can be at ease. On the other hand, unfortunately, there are some companies waiting to prey on their customer’s vulnerability. Here are some signs that can help you identify if a company is legitimate or not;
1-No Upfront Fees
A legitimate company won’t ever ask you for any upfront fee. In fact, as per the FTC, it’s a rule that settlement companies can’t charge their customers any fee until the debt has been settled or resolved with the creditors.
2-Clear Fee Structure Without Any Hidden Charges
A reliable debt settlement company will always choose transparency when dealing with customers. Especially when it comes to their fee structure and policies, they should be clear and transparent with you and there shouldn’t be any hidden charges involved.
3-Realistic And Reasonable Claims
If a company is making any unrealistic or bold claims then you definitely shouldn’t work with them. For example, if they are claiming to eliminate your debt entirely or guaranteeing you debt forgiveness then all of this is completely baseless.
Always remember that whether you are negotiating with your creditor yourself or hiring a third party settlement service, the results are never guaranteed. Your creditor is under no obligation to accept your settlement offer. So if a company is making any such claims prior to negotiations then it’s definitely a red flag that you need to watch out for.
4-Free Initial Consultation
A legitimate debt settlement company won’t have anything to hide from you which is why they’ll be open to free initial consultations where the customers can ask questions and explain their situation in detail. This is a clear sign of a legitimate company and you should take complete advantage of it. Visit their physical office, ask questions, tell your side of the story and discuss how they’ll proceed with your creditors.
5-Positive Customers Reviews
As said earlier, platforms like Yelp, Google and BBB can be really helpful for people looking for reliable debt settlement services in their areas. Before hiring a company, you should read online reviews. The more positive the reviews and ratings are, the more authentic the company is.
Key Takeaway
You need to invest a good amount of time when searching for a reliable debt settlement service in your area. It’s not the kind of decision that you should rush into. Take your time, ask questions, read online reviews, check their policies, visit their physical offices and then sign up for any contract. Even if you have the slightest doubt about a company and their practices, it’s best to avoid them and save yourself from getting scammed.
FAQs
Q1. Will Debt Settlement Affect My Credit Score?
Yes, debt settlement will bring down your credit score and it’ll stay on your report for more than 7 years. However, the damage isn’t permanent and after resolving your debt, you can take certain measures to bring your credit score back on track.
Q2. What’s Better? A Local Or A National Settlement Company?
It all depends on your situation and requirements. If you are looking for a company with better face to face support then opting for a local company is the better decision. But if you are looking for a company with more resources then you’d need a national settlement service for it.
Q3. Can I Settle My Debt On My Own?
Yes, you can settle your debt on your own but it’s highly recommended to use a professional debt settlement company for the job. These companies have more experience and they use a more professional approach in their negotiations which increases the chances of a successful settlement. You just have to find the right company to work with and at the end, it’ll all be worth it!