In our last article we discussed the dangers of dealing with and using a debt settlement company. If you are still planning on using one of these services, you should at the very least do your homework on the company you are intending to do business with. You owe it to yourself, after all to do due research into the company since you will be spending a lot of your hard earned money. Since the money you will be placing in escrow could be going towards paying down your debts, and the fact that your debts are going to increase during this time, you owe it to yourself to make the most educated decision you can on whether or not to do business with that debt settlement company.
The first order of business will be to call your state attorney general office and inquire as to whether or not the company you plan to do business with is required legally to be licensed to do business in your state, and if so, if the debt settle company in question is in fact licensed or not. If a license is required, and they do not have it, that is a huge red flag. You should also ask the state Attorney Generals office if there has been any complaints filed on them. Your local consumer protection agency is also another place to inquire about any complaints that may have been lodged on them, as well as your local Better Business Bureau.
Google and Bing are also your friends when it comes doing back ground checks on debt settlement companies. Simply type their name into the search engines along with terms like complaints, scam, fraud. Any negative information about these companies on the web will be highlighted right away. Any lawsuits that have been filed against them will also show up. You will want to hear about others experiences with the company, both good and bad. Be on the look out for any information regarding unfair practices, rip offs or deception.
Next you will want to learn what fees are involved, and when those fees can be triggered. Debt settlement companies can charge you a fee only when they have successfully negotiated a settlement with a creditor on your behalf, and they can only charge you a portion of the full fee. For example if you have 7 debts and they settle out two of those debts, they can only charge you for settling two of those debts, as the remaining 5 are still yet to be settled. You can also face a fee for the managing of your escrow account, but you are however entitled to interest on any money within that account.
Lastly make sure that the company you are dealing with has full disclosure. You want to ensure that the full cost and terms are disclosed and defined, as well as any conditions involved with the use of their service. The company must also be realistic in explaining how long it will take to see results, specifically how long it should take to make an offer to each of your creditors. They must also fully disclose the effect that not paying your creditors will have on both your credit report and your credit score, as well as the full scope of the consequences of not making payments to your creditors. You should also make sure that they are not the account administers, if they do in fact manage your escrow account this is a major red flag. The debt relief agency must also fully inform you of the minimum amount they need to collect from you before they will begin making offers to your creditors.
One thing to remember is that you can do this same service yourself, often with less impact to your credit score. I would advise anyone reading this not to do business with a debt relief agency as they offer very little, but can cost you dearly. Again just make sure to gather all of the facts before making any long term financial decisions that can affect your long term credit future.
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