How To Research a Reputable Debt Relief Company
There are very few things in life that can cause as much stress as being in debt. From paying the minimum on your credit cards (if that!) to debt collectors trying to reach you on the phone – falling into debt can be devastating. Even worse, once it starts, it’s hard to stop the bleeding, as it’s like a snowball rolling down hill. This is particularly true if you are only paying the minimum payments on your bills each month because, as we all know, this makes your balances balloon.
Unless you get a job with a significant pay raise, get help from a loved one, or experience a windfall, it can be nearly impossible to get out of debt once you’re in it. There are debt relief companies out there but they don’t all have your best interests at heart.
In fact, you likely know someone who has fallen victim to a dishonest firm. So, how do you know which companies to trust? Read on for tips on how to research a reputable debt relief company.
Understand Debt Consolidation
The term “debt consolidation” gets thrown around a lot, and some companies overuse it and misuse it. As this NationalDebtRelief.com article notes, “There are many companies offering debt consolidation solutions, but a true debt consolidation loan usually requires that a consumer be up-to-date with payments and have a decent credit score. If you’ve damaged your credit and are behind in your payments, then other solutions exist that you may want to consider.” If you’re being honest with yourself and know that your credit is bad and you’re behind on payments yet a company still claims to be able to provide you with debt consolidation, be very wary.
You should also have a clear understanding of what this is in the first place. Debt consolidation means you are getting a loan from a bank or finance company in order to consolidate all the debt into one loan.
Debt settlement, on the other hand, means that you’ll be working with debt settlement companies to negotiate a lower balance on your payments so you make more lump sum payments. In essence, this is more of a negotiation. And finally, there is debt management, which means companies will negotiate lower interest rates for you. This will lower your payments and ideally help you to pay off your debt faster.
As you can see, simply being informed about which kind of help you are getting is the first step towards finding a reputable company.
As with any industry, a great way to find a reputable debt relief company is to start by checking the ratings with the Better Business Bureau (BBB). Not only will you see what kind of rating the company has, but you’ll also be able to see if any lawsuits have been filed against them (obviously a huge red flag). You can also check with the National Foundation of Credit Counseling, The Association of Independent Consumer Credit Counseling Agencies, or any other affiliated association. If the debt relief firm you’re looking into is registered with agencies like this, that’s typically a good sign. It’s just a matter of doing your due diligence in studying online Community Tax reviews and the like.
Understand the Terms and Fees
When it comes to debt relief, the fine print is important. And there are red flags to watch out for. As this SuperMoney.com article notes, “Debt collection agencies are prohibited from charging any upfront fees before they settle your debt. Steer clear of any firms that do.” The article goes on to advise that the sign of a reputable firm is one that only charges performance-based fees. In short, ask whatever firm you go with when they will charge fees and what for, as some will charge you every single time they settle a debt with a creditor instead of one lump fee. Alternatively beware of companies that promise too much. If they tell you they can settle your debt for a tiny fraction of what you owe, run—don’t walk—in the other direction. It’s likely a scam.
Make sure you keep important documents and best-case-scenario, you can scan all your important files and keep them all in one place in your computer by using a scanner from places like Epson or retailers like BestBuy.
Debt Relief Is Possible
If you’re in over your head when it comes to debt, don’t just give up and automatically declare bankruptcy. Learn how to manage and save your money so you can get out of your cycle of debt. However, beware of what some of these debt relief firms offer, as they often come with strings attached. Follow the advice in this article and you’ll be on your way to solid financial ground once again.