Debt. You’re drowning in it. Creditors call day and night demanding payments that you simply can’t afford. You’ve decided to move forward with debt settlement, still you’re unsure of the process in choosing a debt settlement company.
Industry changes in 2010 offer new protections to consumers in need of debt settlement. Still, you need to research and think through the selection process before making a decision.
Can you say ‘yes’ to all of these points?
A legitimate and honest debt settlement company will easily meet these stringent criteria:
Company is a member of the consumer credit advocate group, American Fair Credit Council (AFCC), formerly known as The Association of Settlement Companies (TASC)
- Is compliant with the AFCC code of conduct
- Is a member of the International Association of Professional Debt Arbitrators (IAPDA)
- Ensures associates are IAPDA-trained and experienced in debt settlement, debt management, and financial planning
- Will not require or accept up-front payment just to get the process started
- Will not accept money from you, until after a debt settlement plan is successfully negotiated for you, clearly presented to you, and accepted by you
- Will not accept you if you can actually pay off all of your debt
- Has clearly written policies and procedures about their debt-settlement program
- Is a member of the Better Business Bureau and has no less than an A- rating
- Has a resolution and review process for customer disputes
- Has attorneys with significant experience in credit-industry compliance
- Handles client matters—your debt settlement negotiation—in-house
- Offers full disclosure of all debt settlement program fees and costs before the start of a debt settlement program
- Informs its customers, the IRS classifies any forgiven debt above $600 as income that can be taxed
- Requires prospective clients to commit to saving money on their own to fund settlements
- Does not handle or escrow money saved by clients because of the risk of embezzlement and fraud
- Negotiates on an ongoing basis with your creditors and presents all settlement offers to you for your exclusive approval
How did the debt settlement company of your choice measure up to these standards? If you’ve checked every box, then the debt settlement company you are considering will work in your best interest. If not, keep looking until you are satisfied.
Beware of false promises
Watch for these red flags when considering a debt settlement company. If any of these negative marks surface, just say ‘no’:
- Company is not a member of AFCC (formerly TASC)
- Company collects money up front or sets fees based on a percentage of your debt
- Counselors are paid on commission
- There’s no money-back guarantee
- Counselors and employees are not experienced and trained in debt settlement and financial matters