Debt is a problem that takes a lot of time and determination to solve. If you have so much debt that any attempts to eliminate it feel like you are just treading water, you may need some extra help. There are several ways to get debt help and some are more direct than others. You can get some indirect help through credit counselling, which is when a professional will look at your finances and help you create the best plan to pay off your debts.
You can also choose to use more direct methods like debt consolidation or debt settlement. These should always be used as a last resort because they almost invariably affect your credit in one way or another. However, if it is used properly by an upstanding company, it could be a good option for someone who is desperate for debt relief.
Picking the right debt settlement firm is essential, especially since there are some out there that are not the most trustworthy companies. When you are choosing a firm, ask them plenty of questions, research them thoroughly, and talk to anyone you know who has used them. As you learn more, look for the following warning signs:
There are Exorbitant Fees
The first thing you should ask when you use any service is, "what are the fees?" A debt settlement company should be focused on helping you get out of debt, but fees are one way they generate revenue. However, if there are any up-front fees, not only is that a poor deal for you it is against the law. The Federal Trade Commission requires debt settlement companies to charge no fees until a debt has been settled.
Also, ask for a written summary of the fees you should expect. If they can't give that to you, then that could also be a deal breaker.
It's a Young Business
Experience and a track record of success are the marks of a good debt settlement company. If the business is brand new, they might have very little experience and it could be risky to trust them with your finances. Also, look at their success rates. Some companies boast amazing results but they are only reporting some of their best cases while they had very little success otherwise.
They Make False Claims
Sketchy debt settlement businesses often make claims that they can't legally or logistically backup. When you are speaking with an agency representative you should ask them several questions and listen carefully to their answers. If they say they will stop all creditors from contacting you, they are either lying or they are wrong. A debt settlement firm cannot keep all creditors from calling you. If a creditor has hired collection agencies, they can be stopped but you can't always get the original lender to stop calling. They may be able to stop some creditors from calling but it's impossible to stop everyone. Also, if they tell you that you have no chance of being sued this is another red flag. They can minimize your risk of being sued but it depends on the creditor and a variety of other factors.