September 27, 2011
How To Avoid a Debt Settlement Scam
If you’re thinking about using a debt settlement company, read this first.
By Stephen Smith
How do you know that the debt settlement company you are speaking with can actually perform the job you hire them to do for you? This is the million dollar question that you will ask yourself when talking to a debt settlement company. Most likely, you’re already in a tough situation with your creditors and the last thing you want to do is compound the issue with a debt settlement company that can’t accomplish the job or even worse, it’s a scam.
Hiring a debt settlement company should be like hiring any other professional service. It is important to do your homework and research before making a commitment.
Would you hire an attorney to represent you without first feeling comfortable with his knowledge of the law?
Before I begin with my tips on how to avoid a potential bad debt settlement company, I wanted to address a few things. First, the government has implemented regulations for debt settlement companies to follow as of October 2010. This has done a lot to clean up the industry and get rid of the bad seeds. To date, an estimated 85% of Debt Settlement businesses have left since this time last year. However, this does not mean there are no longer any bad seeds in the industry. The problem now is that some of these companies cannot adequately represent their clients because they lack experience and knowledge. Second, people need to understand that it probably took years to build up their debt. Therefore, it will take time to pay off the debt. How can you expect a company to just snap their fingers and magically make it disappear? We have all heard horror stories about what happen to people that were working with debt settlement companies.
“If someone says they were “ripped off” or “scammed” I believe they didn’t fully understand how the process works or didn’t
take the time to think about their decision before jumping into the program.”
A good company will take the time to understand your situation and they certainly should not be pushing you into anything. If you do feel pressure from the consultant then I would choose another company to handle your debt settlement. All, credit card and collection companies will settle for less than owed. The reason they initially say they don’t is so that everybody does not come to them requesting to settle for less (If somebody owed you money, you’re not going to immediately give in and take less money are you?) On the other hand, there does come a point in time that you would be willing take less if that meant not getting zero…right? The trick is to get the best settlement possible. Some companies are able to accomplish this, while others are just out to make a buck.
Please understand that settling your debts for less than owed is a lot different from credit counseling, debt consolidation, and making your minimum monthly payment to the debt. It is by far the most aggressive way to save money, time; avoid bankruptcy and improving your financial position. It is the most effective alternative out of the three ways available if you ever do find yourself in need of assistance with your debt.
Any good debt settlement consultant should take the time to educate their clients and explain everything involved with a debt settlement program. I am always saying “The more information I can provide my client, the easier it will be for them to complete the program and for us to finish the job we were hired to do.” In other words “Knowledge” is power.
Here are my 5 tips to help educate a person thinking about getting help with their debt and hopefully avoid getting ripped off by a debt settlement company:
1) Ask if they have references, testimonies or Tangible proof they can settle your debt. Unfortunately, this is a topic that a lot of people don’t want to talk about, but it’s always good to ask for a reference. If they don’t have references or settlement proof letters, make sure to ask for testimonies or proof of past work. Here is a an example with what you’d expect to see with a reputable company: Testimonials
2) Read everything and don’t sign or agree to anything until you have prepared a list of questions to ask your consultant. Remember that the debt going into the program is yours, not the companies and if anything goes wrong you are responsible, not the company. If the consultant did his or her job there really should only be a few questions to address before signing.
3) Don’t be afraid to ask questions, there is no bad question; accept the one that is not asked. If your debt consultant avoids a question, then they are probably hiding something (a good debt settlement consultant should want their client to be completely informed about the program and how it works). I tell all my clients that we have to work together to resolve these debts. We will do our part as long as you do your part. In addition, my company and I want to remain a reputable company so we do have something at stake with each and every one of our clients.
4) The three Bs when choosing any professional company is to check the Better Business Bureau and it’s always a plus if the company is accredited with them as well. If they do have complaints and it’s not a lot, then that should be okay. Just make sure to check and see if they were they resolved. Click here’s American Financial Protection Groups BBB rating.
5) There is no get rich solutions or quick fixes. A good debt settlement company will be able to help you with your debt by saving you money, time and most important improving your financial position. Make sure the consultant displays a genuine concern about your current position and not just about closing the deal. Also, it’s a good thing to check their financial intellect level.
It is important to do your “homework” and follow my tips above. This should help reduce the chance of getting taking advantage of by a debt settlement company. Ultimately you’re looking for financial help and finding the right company can be tough, but the right company will have you debt free and smiling again.
Settling your credit card debt is a legal and aggressive strategy. The more you know, the more you will feel comfortable with your decision. I Hope these tips will help you when choosing the right debt settlement company.
Stephen Smith
stephen@americanfpg.com
