Finding the Right Debt Settlement Company for Your Financial Needs
The debt settlement industry, as a whole, started to garner a bad reputation in the years leading up the great recession of 2008, where some debt relief firms took advantage of distressed customers and made a bad situation worse.
As a result, the Consumer Financial Protection Bureau (CFPB) was created along with a host of laws that place checks-and-balances on what debt settlement companies can promise consumers and how their services can be billed for.
Many debt relief companies failed during this industry reform. The survivors revised their business strategies to be more helpful and transparent for customers looking for debt settlement services.
The information on this page will help you select the right professionals to set up and negotiate your debt settlement program and help you stay on track throughout its duration.
Once you’ve determined Debt Settlement is the best debt relief option for your situation, you have another decision to make: Do it yourself or hire a pro. Hiring a debt pro will help to ensure that you are getting the best deal in terms of the settlement amount, but this service does come at a cost.
How to Verify a Debt Settlement Company’s Reputation Status
This checklist can be used to help you verify that a debt settlement firm is legitimate. It involves:
- Asking the CFPB if there are complaints against the firm in question and how those complaints were managed. Settlement companies that don’t take good care of their customers will often have multiple, unhandled complaints on record with the CFPB.
- Contacting your state’s attorney general and inquiring if any action has been taken by your state against the firm in question.
- Checking the business’ Better Business Bureau profile and seeing if there are any complaints and how they were handled.
- Browsing the settlement company’s reviews from reputable third -party sources such as TrustPilot or TrustLink. These sites often have a slew of customers talking about their experiences with the business & allow you to look at testimonials from past customers.
Black Hat and White Hat Debt Settlement Firms
Unfortunately, the debt settlement industry is littered with black hat debt settlement firms who will take your money and do little or nothing to reduce your debt. These are the firms you want to avoid.
However, the good news is that there are also legitimate, white hat, debt settlement firms – New Era for example – who can provide a valuable service. Here’s how to be sure you select one.
Separating the Reputable Debt Settlement Companies from the Rest
You can pick the good guys from the bad guys by asking 14 important questions. Those questions and the answers you want to hear are detailed in our special report The Truth About Debt Settlement: 14 Questions to Ask and Answer.
What Makes the Good Debt Settlement Companies Different?
- Excellent turnaround time. Although it is quite rare, some debt settlement cases can take up to 3-5 years to come to a close. The best settlement companies have a track record of getting the job done in a timely manner because they have established firm relationships with the major financial institutions. A company that does not have these connections may take much longer to bring about the settlement offer.
- No upfront fees. A Debt Settlement company should not charge you any fees unless or until they settle your debt. Period. This is not only the most ethical way to do business – per an FTC ruling effective October 27, 2010, it’s also the only legal way to charge fees.
- No “add-on” fees. Some debt settlement companies try to get around the law by charging administrative fees, signing fees, consultation fees and various other excuses to get money from you. The best debt settlement companies, such as New Era, charge only a settlement fee, which you do not pay until your debt is settled.
- End-to-end service. Some “debt settlement” companies you may talk with are really only sales groups who will sell or pass your account off to a different company to handle your settlement. This means your financial data is being passed around and the sales person has no control over – or interest in – how your debt is settled. Look for a company such as New Era who will handle your program from beginning to end.
- Experienced financial team. With the crash of the sub-prime mortgage industry, many new debt settlement companies headed by prior mortgage industry professionals suddenly popped up. These companies do not have nearly the experience or the relationships that lead to your best settlement deals. Look for companies who have been around long enough to amass a solid settlement track record. For example, New Era has been settling debts since 1999, and we’ve settled more than $250,000,000 in debt for our clients.
If you eliminate any company that does not meet the above criteria, you’re well on your way to selecting a legitimate debt settlement company that has your best interest at heart. There are other factors that can be important when evaluating a debt settlement firm and you can read all about them here: The Truth About Debt Settlement: 14 Questions to Ask and Answer.
Contact a debt relief expert at New Era Debt Solutions for ideas on how to become debt free.