The term “debt settlement” has gotten a bad reputation due to debt settlement scam artists. These are companies who promise you the moon, take your money and then basically disappear.
There are trustworthy debt settlement companies
Despite what you may have heard, there are debt settlement companies that can be trusted and that provide a valuable service. If you choose the right one, it can settle your debts for thousands of dollars less than you owe and provide you with an affordable payment plan that will help you eliminate all of your debts in anywhere from 24 to 48 months.
No upfront fees
Dishonest debt settlement companies usually charge fees upfront. They want to get their money as quickly as possible – before you can learn that they are basically thieves. In comparison, an honest debt settlement company will charge you nothing until it has settled your unsecured debts and you have approved a payment plan.
Known by the company they keep
You’ve probably heard the old adage, you can know people by the company they keep. The same is true in debt settlement. You can be assured that a debt settlement company is honest and trustworthy if it belongs to organizations such as the US Chamber of Commerce. It will have an A or A- review from the Better Business Bureau, will have a Credibility Report with Dunn & Bradstreet and will belong to associations such as the American Fair Credit Council. Finally, if you look it up on sites that review such companies, you should find most of its reviews are positive.
What to expect from a trustworthy debt settlement company
As noted above, an honest debt settlement company will require no upfront payments. It will have a team of experienced professionals who will negotiate with your creditors to reduce your balances. In the meantime, you will make just one payment a month and the money should be deposited into an FDIC-insured trust account. The money will accumulate and eventually used to settle your debts. You should see a significant difference in the amount of your debts within a fairly short amount of time. In fact, a good debt settlement company should be able to help you become debt free in 24 to 48 months.
Debt settlement is an alternative to debt consolidation loans
Some people choose to settle their debts by getting a debt consolidation loan and paying them off. The problem with this is that it does nothing to reduce your debts. You’re merely moving your debt from one set of creditors to the new lender. You will still have the same amount of debt and you will still be required to pay interest on it. Debt settlement is a way to consolidate your debts as you would have only one payment a month – the same as with a debt consolidation loan – but you would actually see your debts reduced and you would not be paying interest on a loan.
Look before you leap
Shop around. Look at some different debt settlement plans. Don’t enroll in any debt relief program until your debt counselor has reviewed your finances and you’ve fully and completely understood how this will help you get out of debt. Make sure you understand all the charges and fees before you sign up. Finally, use a debt settlement calculator to compare the different plans so you’ll know which one will do the best job of helping you become debt free and live an easier and less stressful life.