If you’re struggling to pay your debts each month and aren’t getting anywhere, you may be a good candidate for debt relief. But what company should you choose to help you? While debt relief works, there are scam artists out there. Here’s how to compare debt relief companies.
What is Debt Relief?
Basically, it’s when you hire a company to negotiate with creditors to see if it can get them to “settle” your accounts for less than what you owe. Rather than pay your creditors directly, you deposit funds monthly into a dedicated savings account, from which monies will ultimately be drawn for creditor payment.
While your creditors are not obliged to work with you or the company you hire, they are motivated to do so since they know that should you file bankruptcy – a plausible next step – they usually get zero.
Am I a Good Candidate?
You are if you have no hope of repaying unsecured debt such as credit cards, private medical bills, or personal loans within five years, even if you slash spending to the bone. Your debt load usually must be a certain size, however, depending on the company.
What Makes a Good Debt Relief Company?
Unfortunately, not all debt relief services have integrity. In fact, there are a lot of fraudsters out there. You should look for a program that’s transparent about the kinds of debt they accept, provides a realistic timeline for results, and gives you a clear-eyed estimate of your prospective savings.
In the US, debt relief companies are federally prohibited from charging fees until a debt has been settled.
In the UK, debt management companies can charge a fee even if the debt is not fully cleared, such as a monthly fee for managing a repayment plan. All debt management plan (DMP) providers must follow certain rules and guidance set out by the Financial Conduct Authority (FCA). These apply to anyone providing debt management services, whether or not they charge a fee. In the UK, it is often worth speaking to the Citizens Advice Bureau who will not charge for assisting you.
How Do I Find a Good Debt Relief Company?
Research each company you’re considering before committing to any debt relief programs. Go online for testimonials such as found customer reviews of National Debt Relief.
- Avoid scammers that “guarantee” they can get you out of debt swiftly and cleanly, and within a specific timeframe. While most debt settlement companies can – and should – give you a good idea of when you can expect to be debt free, negotiations are too unpredictable for any firm to answer “when” with specificity.
- As we say, you also want a company that waits until it’s actually accomplished something for you before it sends a bill. If a firm seeks payment before a debt is settled, ask more questions. That outfit may take your money and run, leaving you in an even bigger hole.
- Other unscrupulous companies will string you along, taking your payments and making pledges while you fall further behind on outstanding accounts. If you have student loans, be especially wary. Scam companies are all over this market with bogus vows and advance fees.
- Find a company that will be honest with you about risks. Yes, your credit will take a temporary hit. But your credit score hasn’t been great for ages, and anyway, after your debts are settled and you’ve changed your spending ways, your score will bounce back.
- You also want a company that will send you info about its services without first having you provide financial information such as credit card account numbers and balances.
- In the US, check with your state’s attorney general and your local Better Business Bureau to see whether complaints have been lodged against the firm in which you’re interested. In the UK, check with Trading Standards or look for independent online reviews.
Now you know how to compare debt relief companies. You know what to look for, both good and bad. Do your homework and move with confidence into a debt-free life. Get going today.