Debt Settlement Company and Debt Negotiation Company:

How to Choose a Debt Settlement Company?

With so many agencies, companies, non-profits, and other actors vying for your “debt settlement” business, you may feel overwhelmed. Here are some sound criteria you can use to winnow your choices:

1.Assess credentials for each candidate firm.

Is the firm accredited by the U.S. Chamber of Commerce and/or The Association of Settlement Companies (TASC)? Have consumers or industry watchdogs levied complaints against the company?

2.What guarantees does the company offer?

Will the company refund its fees if it cannot settle your debt? Does the company guarantee solutions to all your credit woes within a few weeks? (If so, that may be a red flag. Credit issues can take a long time to resolve, particularly if you’ve accrued lots of debt and don’t have many liquid assets to leverage to pay down your creditors.)

3. Look out for “red flags.”

Be suspect if a program promises to boost your credit score in the short term. Often, the process of debt settlement actually hurts your FICO score initially before it improves it. This is because, for the sake of efficiency, you often selectively pay down some creditors while going temporarily delinquent (i.e. not meeting minimum payments) on other accounts.

 4. Assess whether the company provides customized or “cookie-cutter” solutions?

Your action plan must be unique. After all, no one’s creditor relationships, income streams, values and goals, savings plans, and level of financial education will be the same. So be wary of agencies or settlement programs that offer “one-size-fits-all” answers to your problems. Your company should take the time to listen to your story and to provide easy access and feedback throughout the process.