Debt Settlement

When properly handled, debt settlement can allow consumers with overwhelming debt to settle for much less then they owe. If it is handled incorrectly, consumers can find themselves in a worse position then they were in to begin with. Although there are guarantees that any program will be successful, there are few questions that you should ask yourself before you choose a debt settlement company.

Is the company asking about your recent account activity?

In some cases, creditors may refuse to negotiate debt with the consumer. One example is if a consumer with a credit card withdraws a large sum of cash and then immediately enrolls in debt settlement. The creditor may view this as a scam by the consumer and they may pursue legal action so that they can recover the full amount due. A reputable debt settlement company will want to ensure that they are aware of every aspect of their client’s debt problems so that they can provide them the best advice.

Is the company being honest about the upsides and downsides of debt settlement?

The debt settlement company must forthcoming and notify their client of any of the downfalls to obtaining their assistance. They should ensure that their client’s are fully aware of any impact that they might experience on their credit history and notify them of any expenses that are associated with the use of their services. Clients should be sure to review their contract for all of the details associated with service and ask any questions if the information seems unclear.

What is the length of the repayment plan?

It is in the best interest of the client to try to pay off their debt in 3 years or less. A reputable debt settlement company should encourage their clients to pay off their debt in the shortest possible amount of time. This practice helps reduce the chance of a lawsuit and will make room for the client to start the rebuilding process quicker. Studies have shown that those on short term programs also have a higher rate of success than clients on a long repayment plan.

Is the company encouraging you to leave any of your accounts out?

Debt settlement agencies will usually ask their clients to include all of their debt. Creditors are usually more willing to negotiate when they feel that the consumer is being upfront. If the creditors see the consumer favouring one debt by remaining current on their payments, while falling behind and not paying them, the debtor may refuse to negotiate.

Has the company asked you about your complete debt and financial history?

If the consumer that wishes to enter into debt settlement has filed for bankruptcy in the last 7 years or less, they will not be likely to find success with debt settlement. It is important to find a debt settlement agency that is thorough in their investigations to ensure that their client is successful. Even though success is not guaranteed for everyone, a debt settlement company should not allow someone that they know will not be a qualified candidate join their program.