In a world in which it’s more common to have debt than not, many people find themselves searching for a solution at some point. Debt settlement is one such option for people bogged down with unsecured debt like credit card bills and medical expenses.
The idea of settlement hinges on negotiating with your creditors — many of whom are often willing to accept a smaller amount than the original balance, provided it’s paid in full in a timely manner. Debt settlement companies exist to help enrollees navigate the process from start to finish, including handling negotiations with their expert teams.
Considering pursuing debt settlement? It’s in your best interest to find the best program possible. Here are six questions to ask any company before signing up.
1. How Much Debt Have You Settled So Far?
The biggest testament to any company’s success is its track record. You’ll want to find out exactly how many clients the program has helped and how much they’ve been able to cumulatively settle for participants. Asking for information about a company’s top settlements to date can help you get a feel for the best-case scenario, too.
2. What Are Your Fees?
Enrollees in a debt settlement program means paying fees. But you’ll want to make sure any prospective company only charges fees after settling an account; not before. In fact, it’s illegal for settlement companies to charge fees up front, per Federal Trade Commission regulations.
Reputable companies will have no problem being very clear about their fee structure from the get-go and will never spring surprise fees on you before a debt has been resolved.
3. Where Do My Deposited Funds Go?
If creditors agree to settle a balance for a certain percentage of the original, that amount needs to be ready to send over. This is why the preparation process involves making monthly deposits until you’ve saved up enough to “play ball” with the creditors.
Ask any prospective debt settlement program where those deposited funds will reside until it’s time to settle. Reputable programs will let you maintain complete control of the account — and it will be FDIC insured, to boot. You should also have the ability to withdraw the money inside that account and close it out at any time.
4. What Are the Risks of Debt Settlement?
Debt settlement, like every debt relief strategy, has its own unique set of possible rewards and possible risks. Trustworthy programs will be just as willing to discuss the risks with prospective enrollees as they are to discuss the potential benefits.
Here’s an example: Any company telling you they can stop collectors from contacting you or prevent lawsuits is exaggerating its abilities; the only thing that can guarantee those conditions is paying back the money you borrowed. Settlement is a way to do so, but the process can take 24 months or more. In the meantime, you can take certain measures to minimize debt collector calls on your own.
5. What’s Your Estimate for My First Settlement?
While nothing is ever guaranteed in the realm of debt settlement, companies can typically provide you with an estimate for how long your first settlement could take based on your financial situation and their experience. It never hurts to ask so you can set your expectations accurately.
6. How Will I Communicate with You After Enrolling?
One of the biggest advantages to working with a debt settlement organization, rather than trying to handle the process alone, is you have a team on your side. Ask up front how you can expect to get in touch with customer service representatives and legal experts.
Asking these six questions before enrolling in a debt settlement program will help you vet it carefully and choose the right strategy for your situation.