Are you in over your head in debt and feel like there’s no end in sight? The first step is to take a deep breath and know you’re not alone. After all, US consumer debt rose $13.9 billion in January 2018 to $3.86 trillion overall; that’s an annualized growth rate of 4.3%.
Whether you’re a victim of circumstance or your own poor decisions, accepting debt is no way to live. Here’s how to find a legitimate debt relief company to fast-track you toward financial independence.
Knowing the General Red Flags
Before you get started researching, it helps to have a general understanding of what are considered “red flags” in the debt relief world. Debt relief scams often include the following:
- Fees charged before debt is settled.
- Promises to stop collection calls.
- Instructions to end communication with creditors.
- Guarantees to settle your debt for a fraction of the sum.
- Guarantees to settle all your debt.
- Promises the same percentage reduction for all your debt regardless of debt type or creditor owed.
Any legitimate debt relief provider will be upfront and transparent about the types of services they offer. Some companies will strictly offer debt settlement services while others will provide additional services such as debt consolidation, debt repayment plans, or a debt management plan based on new terms with creditors, like lower monthly fees or interest rates.
All these options could be beneficial to a debtor, but debt settlement negotiation is typically reserved for extreme debts that cannot be consolidated or restructured through payment plans. If you fall in this latter category, make sure the company you find offers debt settlement.
The most confusing part about researching debt relief companies is sifting through the mixed online opinion of them. There are a ton of different debt relief companies out there, and many have been in business a long time, making it hard to believe they are scam operations looking to put people further into debt. However, for every legitimate debt relief business out there, there’s one looking to scam the desperate and stressed into paying upfront fees for debt that’ll never get resolved.
Any company you decide to work with should be accredited by the Better Business Bureau (BBB) and have a large amount of reviews that are overall positive. It’s unreasonable to expect any debt relief company to have all positive reviews. They — like other businesses — aren’t immune to bad customer experiences. Then again, if every other review you’re reading is negative, that’s a clear sign to look elsewhere. Ideally you want the company you work with to have a long track record of successfully settling debts. This makes it more likely they’ve dealt with your creditors before and can make headway on your unsecured debt.
Debt Relief Timeline
You’ve been living with this debt for a while and it makes sense that you want to get out of it as fast as possible. But don’t let this goal lead you into a scam. Shady debt relief companies know how to appease desperate debtors, and a debt resolution timeline is a key selling point in their tactics. Most legitimate company offers a resolution timeline of between two and four years. If the company you’re talking to is promising to settle your debts within a few months to a year, run away fast.
Why does it take so long? Well, every debtor’s situation is different; the amount owed, how behind you are in your payments, the creditors and debt collectors involved, and what kind of money you have available to fund settled debts all affect how long the process takes.
Transparency About the Downsides
Aside from what a debt relief company can do for you, it’s wise to ask them what they can’t do for you, or rather, what working with them will do to you. Debt settlement affects debtors in two main ways: it can hurt credit scores and it can cost a lot of money in fees (as well as future taxes paid on settled debt). A legitimate company will not be shy about telling you these things if they’re actually trying to help you.
Aside from the above things to watch out for, it always pays to listen to your gut. If a debt relief company is giving you a bad vibe or doesn’t seem to have your best interest in mind, keep looking. There’s plenty of legitimate companies out there that could put you on the road to financial freedom.
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