How To Choose A Debt Relief Company (What Anyone Who Has Debt Should Know)
There are several factors you should consider when choosing a debt relief company that could impact your final decision.
If you’re among the Americans grappling with a share of the $1.08T in U.S. credit card debt, or part of the 8 percent facing delinquency, finding a solution could mark the distinction between ongoing financial hardship and a chance for a new beginning.
That’s where debt relief companies come in. But with numerous options available, it’s essential to find a reputable company that can provide the right solution for your financial situation.
Below, we’ll explore the factors to consider and steps to take when selecting a debt relief company that best fits your needs.
KEY TAKEAWAYS:
- It’s important to assess your financial situation and understand your debt relief options.
- Look for a debt relief company with a proven track record of success and positive customer reviews.
- Remember to verify the credentials and accreditations of the company before enrolling in any program.
What Is Debt Relief?
Debt relief refers to various strategies and programs designed to help individuals manage and reduce their debt burden.
Sometimes, debt relief involves asking the lender to lower the interest rate and monthly payments. Other times, it entails negotiating with the lender to significantly reduce the total amount owed.
And in some cases, it simply involves requesting the lender to extend the repayment terms by another year or two.
The initial aspect to understand about debt relief is that not all forms of debt are negotiable. Obligations backed by the federal government or collateral cannot be negotiated. This encompasses federal student loans, mortgages, and auto loans.
Certain private student loans might be eligible, contingent on the debt relief company and your situation.
Additionally, many debt relief companies mandate that clients experience some form of financial adversity, such as a divorce or job loss, before considering their case.
How To Find A Good Debt Relief Company
When searching for a debt relief company, the last thing you want is to end up in a worse situation than you’re in now.
Look for companies that offer free consultations, personalized solutions, and clear communication about the process and outcomes.
Here are key questions to pose to potential debt relief companies:
- Accreditation & Certificates: Are you accredited by any industry organizations?
- Time in Business: How long have you been in the debt relief industry?
- Success Rate: Do you disclose your success and failure rates?
- Fees: What are the fees associated with your services? What happens if I can’t afford the fees?
- Program Duration: How long is the debt relief program?
- Progress Updates: How do you notify clients of settlement progress?
- Legal Team: Do you have an in-house or external legal team?
Be cautious of companies requesting upfront fees (prohibited by the FTC), guaranteeing no impact on your credit score (settlement affects it), or promising settlements for pennies on the dollar (improbable).
How To Verify A Debt Relief Company
Before choosing a debt relief company, conduct thorough research to verify its credentials and reputation.
Check for accreditations and/or reviews from reputable organizations such as the Better Business Bureau (BBB) or TrustPilot.
Read customer reviews and testimonials to gauge the company’s effectiveness and customer satisfaction.
You can also reach out to your state’s attorney general’s office to inquire whether any action has been taken against the debt settlement firm in question.
What Is The American Association for Debt Resolution?
The American Association for Debt Resolution (AADR) , formerly known as the American Fair Credit Council (AFCC) is a nonprofit organization dedicated to promoting ethical standards and best practices within the debt relief industry.
Look for companies that are members of AADR, as they adhere to strict guidelines and regulations.
Best Companies For Debt Relief
Respected debt relief firms typically offer transparent pricing, boast a strong history of success, garner positive feedback from clients, and employ agents certified by reputable organizations.
When seeking debt relief, it’s crucial to consider various options tailored to individual financial circumstances.
Here’s a breakdown of key strategies:
Debt Consolidation: This approach often begins with local credit unions, which by law cannot charge more than 18 percent interest on loans.
Alternatively, online lenders may offer personal loans with higher interest rates but are more accessible to those with bad credit. Another option involves zero-percent transfer credit cards, although these typically require a credit score of 700 or higher.
Debt consolidation primarily addresses unsecured debts and aims to streamline payments by combining multiple debts into a single loan with a lower interest rate.
Debt Management: Organizations focusing on debt management often offer free credit counseling and aim to find solutions that best suit the individual’s situation.
While some agencies prioritize debt management plans as the final solution, others explore settlement, consolidation, or bankruptcy options. Debt management typically targets credit card debt and operates nationwide.
Debt Settlement: This method involves negotiating with creditors to settle debts for less than the full amount owed. Most companies require a minimum debt load of $10,000 and charge fees ranging from 15-29 percent of the total debt settled.
Americor, one of the leaders in the debt relief industry, offers transparent business practices and high-quality customer service, often helping those with unmanageable debt become debt-free within 2-4 years.
Bankruptcy: Filing for bankruptcy should only be considered as a last resort. Choosing a bankruptcy attorney often involves consulting with local professionals recommended by nonprofit credit counseling agencies or state bar associations.
Fees vary but are typically transparently posted online for each state. While Chapter 7 bankruptcy may cost around $1,000 to $2,000 and Chapter 13 may range from $2,000 to $3,000, the exact amounts depend on individual circumstances and geographical location.
DIY Debt Relief: Individuals opting for a do-it-yourself approach must thoroughly research, seek advice, and set realistic timelines and goals. While this strategy allows for complete control over the process, individuals are advised to monitor progress and consider professional assistance if needed.
How To Choose A Debt Relief Company Frequently Asked Questions (FAQs)
Why is it important to find a good debt relief company?
Finding a reputable debt relief company is crucial for achieving financial stability and avoiding scams or unethical practices. A trustworthy company will provide personalized solutions, transparent fees, and ongoing support throughout your journey to debt freedom.
What are my debt relief options?
Individuals facing financial hardship have several debt relief options available, including debt settlement, debt consolidation loans, debt management plans, and bankruptcy alternatives. Each option has its pros and cons, depending on your financial situation and goals.
What red flags should I look out for in a debt relief company?
Be cautious of debt relief companies that guarantee specific results or charge upfront fees before providing any services.
Avoid companies that:
- Pressure you into signing contracts without giving you the chance to review them.
- Promise to restore bad credit immediately.
- Fail to disclose essential information about their programs and fees.
- Do not inform you about the potential consequences of debt settlement when you cease paying and communicating with creditors.
- Attempt to charge you money before getting you settlement offers from creditors.
Do debt relief companies ask for money up front?
No, debt relief companies are prohibited by the FTC from charging money upfront. Instead, they typically charge a fee based on the amount they have successfully settled on your behalf. This fee usually ranges from 15-29 percent of the settled amount after an agreement has been reached.
How long does debt relief take?
The debt relief process typically spans two to four years, although it could take up to five years depending on one’s total debt and number of creditors.
How much does debt relief cost?
Debt relief typically costs between 15-29 percent of the total amount of unsecured debt that you enroll in a debt relief company’s program.
Final Thoughts About Choosing A Debt Relief Company
Choosing the right debt relief company is a significant decision that can impact your financial future.
By conducting thorough research, verifying credentials, and assessing your options, you can find a reputable company that offers effective solutions tailored to your needs.
At Americor, we understand the importance of managing your finances wisely.
As America’s trusted source for debt relief solutions, we aim to empower you with financial knowledge that can lead to informed decisions, whether it’s about savings, investments, or managing debt.
If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider a free consultation call with one of our certified Debt Consultants, who can provide personalized advice tailored to your specific needs.
By taking proactive steps today, you can put an end to your financial stress and work towards a brighter financial future.
Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.
For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!
