How To Choose A Debt Settlement Company
Posted on May 2nd, 2007 by Marc Chase Posted in Credit Repair | 1 CommentDebt settlement is utilized by tens of thousands of consumers each year in an effort to relieve their debt problems. For most people, the question isn’t “why debt settlement” but which company.
In fact, in this article – Mastercard acknowledges debt settlement as a viable option.
http://www.mastercard.com/us/personal/en/securityandbasics
/debtknowhow/payoffyourdebt/drs.html
Buyers beware!
As with any industry there are just as many scam artists as there are legitimate companies in the debt and credit arena. Below is a basic guideline to help insure you’re choosing the right company for you.
1: Their BBB Track Record. While I don’t think that the BBB is the final say in the way a business conducts itself. More then one or two complaints is certainly a warning flag.
2: Their Fee schedule. Right now the average is 14% to 20%. I have never understood that. It is excessive and there is no legitimate argument for such excessive fees.
3: Credit Repair: Do they have any methods of helping you repair your credit when it’s done? Debt settlement hurts your credit temporarily and that’s just reality. There are things that can be done to mitigate the damage to credit both before and after the settlement process.
4: A separate checking account: I don’t like the concept. While we offer the service as well, I don’t like it. I’ll tell you the only real reason its there. So the debt settlement company has some access to their fees. It will be done via auto debit through that account. I think that’s an insult to our client’s intelligence.
You’re capable of saving your own money and paying the debt settlement fees on your own.
5: Finally – Gut Instinct: Sometimes you just have to listen to that little voice. I’ve seen some pretty shady companies pull off a pretty good sales pitch. Hopefully your instinctive tools are finely honed. You pretty much know when you speak with somebody if you smell trouble. This is a big decision for you and you have to listen to yourself.
Marc you bring up very good points here, I would like to add to it seeing as I work for a law firm that specilizes in settlement.
1. bbb track record. Yes you need to be weary of this a company with to many complaints stay away from. But 1 or 2 isn’t necessarily a red flag, more so how many of those complaints were resolved. You see alot of people if they think there might be a possible problem with the company will not actually call the company and try and resolve it. Instead just complain to the bbb first, and then come to find out their issue is not really an issue and is addressed and fixed right away and could of done so without the bbb. Some people are just scared of any kind of confrontation. Nevertheless even if the complaint was completely resolved the clients liking, the complaint is still there.
2. bar association (for law firms). In the case that you are looking for a law firm to help you through debt settlement you should check the state bar of the law firm. To see that they are in good standing and not under investigation. When dealing with regular debt settlement companies you do not have this extra layer of protection and peace of mind.
Antoher thing about dealing with law firms over normal settlement companies is that law firms by law can stop the collection calls. Under the FDCPA a collector(not the original creditor) must deal only with the firm and not the debtor.
When it comes to fees they are necessary in order for a business to survive without them there would be no service and you would be stuck doing it on your own. While you can get a settlement on you own it is not advisable. If you do not know how to deal with these people you will not get a good settlement. Plus if you do not obtain the proper documentation from the collector they can sell off the remaining part of your debt. And you will have to deal with the calls no matter what. HOwever you can write a cease and desist letter which will stop the calls. But this leaves the collector no other way of collecting the money other than suing you. They have absoletly no means of communication other than just serving you papers.
3. credit repair. You can read more about how I feel about this from another comment I made from a different article Marc wrote on this site about credit repair or debt settlemtn.
4. One major problem people have with their own account is self disipline. I have dealt with a lot of clients who were enrolled into a debt settlement program that required you to save the money in your own account. However you will pay the fees to the company up front. So if you do not stay discplined to setting aside the proper money each month, or if you go and use that money for something else. When it comes time to make the settlement the money may not be there. Now your really hurting because of the fees you paid to a company that now cant do the job.
And yes trust your gut. If you think the person on the phone sounds shady and the company dosent check out and does not look reputable stay away!! There are many many companies in this industry that are scams and only in it for themselves. But there are many out there that will do a very good job. Good luck to anyone who reads this. Again Marc another great article I really like the info you have on your blog.