You’ve carried debt since you took out a modest, but necessary, student loan for college. However, it wasn’t until you finished college and started progressing in your career that you let lifestyle outpace your means.
If you’ve accumulated a burdensome level of debt that you’re struggling to manage, a few options exist depending on your situation. These options are debt consolidation, debt settlement, bankruptcy, or a combined DIY approach.
If you don’t want to file for bankruptcy and can’t get out of the hole yourself, debt relief assistance could be worth your while. But as you’ll find out, a quick Google search for debt relief companies will yield way too much noise.
Cut through the mass of information to find out the truly important criteria for any debt relief company below.
Length of Time in Business & Number of Debts Settled To-Date
A lot of debt relief companies talk a big game. Then again, they’re not all created equal, mainly in terms of experience. Any company you’re considering should be a mainstay in the space and have many years of experience. They should also employ a staff of seasoned professionals. Chances are that if the business has been around for a while, then they’ve successfully settled their fair share of debts. Don’t be afraid to ask for their success rate and debt settlement averages. If they’re for real, they’ll be happy to share.
Know the Red Flags
In any area of life, one should always be weary of guarantees. The hard part comes when the guarantee is something we’re badly needing. Any debt relief company that promises a certain amount of debt forgiveness, claims a zero-negative effect on your credit score, or says they will make creditors stop calling you isn’t a legitimate company. Further, any company that guarantees you won’t get sued or can’t give you an estimated timeframe for your first settlement isn’t one you should be working with.
Cumulative Reviews & Press
Anyone looking for a debt relief company would be well served to take positive and negative reviews with a grain of salt. Like most products on Amazon, there are a lot of positive reviews, but negative ones also exist. Pay attention to what the common themes are in the negative reviews. Does it seem that the company dropped the ball or that the customer had improper expectations and needed to vent online? How have the reviews aligned with the interactions you’ve had with the company so far, such as introductory phone calls and consultations.
It’s important to understand that debt relief in general is a heavily stigmatized industry. Consider the Freedom Debt Relief lawsuit last November filed by Consumer Financial Protection Bureau (CFPB), in which the CFPB alleged that Freedom charges consumers regardless of if they negotiate settlements with creditors when Freedom states that consumers will only be charged if and when a settlement is made and payment is rendered. Freedom CEO Andrew Housser vehemently disagreed with the lawsuit saying the CFPB “fundamentally misunderstands” the debt settlement process.
So, in this case you have a national company with thousands of positive reviews and debts settled under their belt, but you have a national bureau legally calling them out for being shady in their business practices. This undoubtedly hurts their public reputation, but their stats to-date don’t lie, and debtors are still seeking their services. In other words, the company really is doing good work.
This suggests that lawsuits and big press can be misleading. Take it with a grain of salt like the other reviews until you form a first-hand opinion of the company on your own.
Are they Accredited?
You should make sure any debt relief company that you engage with has proper accreditation. If a company isn’t accredited at all, that’s a red flag. If they’re not accredited by common organizations like the Better Business Bureau (BBB), you should be asking them why. Some other top accreditations to look for include the American Fair Credit Council (AFCC), the International Association of Professional Debt Arbitrators (IAPDA).
Customer Service
This is a hard one to predict before actually engaging a company for debt settlement or consolidation services. Still, keep in mind that debt relief companies are only paid when they settle a debt of yours, and you agree to pay that settlement. Any company that tries to charge you fees at the start is trying to scam you. Other signs of good customer service to look for are if they offer an online dashboard so you can see any savings or progress, and if they give you a dedicated customer service representative to handle your account.
Keep this criteria in mind when vetting debt relief companies and you’ll have a nice foundation to make the decision that’s best for you.
