In the face of global recession when mounting debts are taking a toll on people’s financial resources, the assurance of debt settlement companies seem to be a ray of hope. Considering the apparent prospects of getting the debt settled easily, more and more people are putting their faith in debt settlement companies.
But a shade of doubt still lingers. Thousands of debt settlement scams are reported to the FBI everyday. So, are these companies worth putting faith in?
However, it is equally true that genuine settlement companies do exist. And you must be very careful while choosing a settlement company that would handle your debt problems.
Certain things you must always keep in mind while hiring a debt settlement company. These would not only prevent you from falling prey to the settlement scam but also get your job done without hassle.
- Settlement companies charge a handsome amount for their services. But ideally the amount should not exceed 20 % of your total debt. At the most 35% of the projected settlement amount is admissible.
- The process may take a few years to get completed. But ideally it should be over in two to three years. If company representative convinces you on very low amount and through a longer period of time than what other reputable companies offer, beware of the company! A long period only keeps you into the payback plan for a longer time and you end up saving very less money. The motive behind stretching time is nothing but letting the interest grow and ensuring more inflow of money into the company.
- The settlement company that you have hired, must ask the creditors to stop all interest, late fees and over limit fees from accruing, lest the debt continues to mount and you end up owing a larger amount.
- Often debt settlement companies ask clients to stop paying their bills in order to save money in a separate account for a future settlement. The settlement company usually keeps the detail of this account savings and it withdraws its monthly fee from this account. This practice can cause you a real loss over time. So, beware of such proposals given by the company.
- Read all the documents very carefully before signing or providing your personal financial information. If you are not provided with the information in writing before payment, do not hesitate to reconsider.
- Always choose a settlement company endorsed by the Better Business Bureau (BBB), or some other reputable pro-consumer group.
- Look for companies with a clean history of effective debt settlement. If possible ask for references or case-studies to cross-check the company’s track record. If company seems to be reluctant to provide you with it, perhaps the company is not trust-worthy.
- You may seek information and testimonials related to the debt settlement company on the internet. Google the name of the company and click on ‘show options’ and then on the ‘discussion’ section. This way you can come across loads of online discussions, suggestions and updates regarding the company, which would help you to get a fair idea about the company’s reputation.
Thus we see that avoiding settlement scams is not that difficult, if you strictly follow the above guidelines.
Despite the precautions, if you still get caught in any kind of settlement scam, there is nothing to get afraid of. As a debt settlement scam victim, you may lodge your complaint with the Better Business Bureau (BBB), or even consult with the National Consumer Debt Council for help.
Above all, reputed debt attorneys in your state can help you find effective solutions to your credit problems.
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