If you have accumulated a lot of debt and want to engage the services of a debt settlement company to assist you, there are some questions you must ask them before you sign a contract. They include:
1. How does debt settlement work?
A debt settlement company works to get your loan reduced to a lower amount. Say for instance you owe $ 40,000 and are supposed to pay $1,000 every month to service the loan, but your financial circumstances change and you are only able to comfortably pay $500 every month.
The debt settlement company will suggest opening an escrow account where you contribute the $500 every month. When a deal is reached between the debt settlement company and the creditor, the amount you’ve been contributing is sent to the creditor.
2. Are you an accredited member of the American Fair Credit Council (AFCC?)
AFCC is a trade union that regulates the debt settlement companies. AFCC is a very credible body to belong to because it has very strict guidelines and standards for its members.
To belong to AFCC, debt settlement companies have to go through a thorough audit that is carried out at their premises.
3. What level of experience does your debt settlement business have?
Experience is everything in financial matters. If a company doesn’t have enough experience, they will not represent you sufficiently.
You want to get the best settlement deal and the only way to do that is to get a company with a good track record of settling debts.
4. Are you licensed to provide your services in my state?
Find out if the debt settlement company you want to contract is allowed to provide its services in the state you live in.
Insist on seeing their operating license and call consumer protection bodies to check up on the license number.
5. What are your charges?
You will incur a fee for the services but it will vary from company to company.
Good debt settlement companies only ask for payment once they have successfully negotiated a settlement for your loan.
You will not make the payment upfront. It will be recovered from the monthly installments you will be paying into the escrow account.
6. Will you be making payments to my creditors as I wait for settlement?
The debt settlement company does not make any payments for you or on your behalf. They negotiate for your loan to be lowered and you contribute the money until it’s enough to make a lump sum payment.
7. How soon can my debt be settled
The speed of your debt settlement is dependent on:
• Following the rules outlined by the debt settlement company.
• Making your payments into the escrow account on time.
• The larger the loan amount, the longer it will take to get debt settlement.
By asking the above questions, you should get enough information to help you decide which debt settlement company you want to work with.
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