If you are looking for help to get out of debt and considering the debt settlement process, there are several questions to ask a potential debt settlement company. How they respond will tell you a lot about the company and whether or not they can help you eliminate debt. Debt settlement or debt negotiation is a perfectly legal process that can help qualified debtors. While the process is legal, not all companies that promise to help you wipe out your debt are legitimate. To avoid teaming up with the wrong company you should ask the following questions and pay close attention to the answers you receive.
How much will it cost?
There are many variables to be considered when you negotiate your debt. It is impossible to guess whether or not a creditor will be willing to deal and if so, how much they will accept. Any debt settlement company that gives a set amount as the price you will pay is making a promise they can’t possibly know for certain. On the other hand, they should be able to give you a set amount for how much they will charge for their services. Understand the fees as well as the fee structure before making your final decision.
Where will my money be held?
A legitimate debt settlement company will require you to deposit a set amount of money each month into a third party escrow company. The escrow company should be FDIC insured to protect your funds. You must save money toward settlements as creditors will expect a lump sum payment once an agreement has been met. Avoid companies that tell you to save your own money or send it directly to them.
How will this process affect my credit?
Your debt settlement company must be forthcoming in the negative impact debt settlement can have on your financial situation. This process is for those facing a severe financial hardship with no other option besides filing for bankruptcy to remedy their situation. In order to qualify for this process you are likely already delinquent on payments or about to become delinquent. As you save for settlements you will stop paying your creditor which will have a negative impact on your credit. Anyone who says differently is probably more interested in your cash than helping your resolve your problem.
How much experience do you have?
There are hundreds of debt settlement companies which have sprouted in recent years as a result of the suffering economy. Many of these companies have little experience which can cause a big problem for clients enrolled in their program. Not every company is created equally, therefore you want to look for an established company which can back up their claims with proof. This is one situation where it pays to find someone who is an expert in the industry.
Are you a member of TASC?
The Association of Settlement Companies (TASC) is a trade association in the debt settlement industry. They require members to comply with industry standards. Don’t just take the companies word on the matter, many debt settlement companies whose membership is no longer valid continue to display TASC accreditation on their site. Visit the TASC website to confirm membership.
For people who are deep in debt, this process may be the best option to finally regain control over your finances. Unfortunately there are no guarantees and the method has several risks which cannot be avoided. Do not compound these issues by dealing with a debt settlement company which has neither the ability nor interest in helping your get out of debt. Research each company before making your final decision to avoid additional financial problems.