The 7 Questions You Need to Ask a Debt Settlement Company Before You Sign Up

Having settlements negotiated on your credit card debts requires know-how, patience, persistence and requires a lot of time. Using a good debt settlement company is a great idea if you want it done right.

The total cost of getting your debt settled over 3 years with all fees included should be less then what you owe today. There is however some questions you should ask the debt settlement company before you begin.

What is their better business bureau rating?
Look for a company with an “A” rating with the BBB. It’s a good sign the debt settlement firm have given their clients very little to complain about. Visit the better business bureau’s website and search for the company you are interested in doing business with.

Are they listed with Dun & Bradstreet as part of the web logo program?
It’s a good sign the company is active and not in bankruptcy

Are they a member of the International Association of Professional Debt Arbitrators or IAPDA?
The IAPDA provides useful debt negotiation training to new hires in debt settlement companies. Being a member shows a commitment by the company to training their debt negotiators properly.

Where are they located and licensed to work?
If they are local, why not pay them a visit? A company operating by a PO Box should be avoided. Several American debt settlement companies advertise their services in Canada, and visa versa, but they aren’t familiar with Canadian creditors and collection practices. When seeking Canadian debt settlement help, always deal with company in Canada and is familiar with Canadian creditors.

Is debt settlement their primary line of work?
Some debt settlement service providers have surfaced who have little to no specialization in debt negotiation. Mortgage agents, real estate agents and even bill collectors working from their home all come to mind. All of these people are usually not properly licensed, trained, insured or bonded to negotiate your debt. They are usually just looking for a quick buck. Always deal with a company that just settles debt; “jack of all trades” are usually masters of absolutely nothing.

How long have they been in business?
In debt settlement, having experience matters. Debt settlement is a newer industry and dealing with an experienced company with a proven track record of success is always better. An established company will have relationships and understanding of creditors’ collection and negotiation policies.

Have they fully disclosed the negative aspects of a debt settlement program?
If the negative aspects of debt settlement haven’t been explained fully then that’s a good sign the company is either too new in the industry or a fly-by-night operation. Well run debt settlement companies just don’t talk about benefits; they should talk to you and fully disclose all aspects of the program so you are going through it with your eyes wide open. In particular they should freely talk about these three items:
1) The threat of legal action while in the program
2) Effects of debt settlement on your credit
3) Collection calls cannot be guaranteed to stop

The best indicator of a good company is full and absolute disclosure about the program. If they are not speaking to you in plain English, are evasive or talk in circles, run, do not walk away from these companies.

Debt settlement is a for-profit business model and the company will not be compensated in anyway by your creditors like some credit counselling companies are, so there is a cost involved. But as mentioned before, if you choose the right company, you should get debt free in 3 years for less then what you owe today.