If you are looking for the answer to your debt problems, you may be wondering “What is debt settlement?”. With debt settlement, you eliminate your outstanding debts. You work with a debt settlement company who negotiates with your creditors to reduce the amount of debt so that you can afford to pay it all off. You can reduce your debt by 40%-60% with this process.
Finding the right debt settlement company for you will take a lot of time and homework, but don’t rush the process. Not all companies were created equal and while some might help you eliminate your debt, others might end up costing you more. For every debt settlement company that you contact, ask the following questions:
1. What are the administrative fees? Ask about an initial administrative fee as well as monthly service fee. This will vary by both company and the amount of debt that you owe. Of course the companies need to charge fees to provide the services, but, depending on your situation, your money might be better off sent directly to your creditors.
2. Does the company have IAPDA certified debt arbitrators? IAPDA, the International Association of Professional Debt Arbitrators, is an organization that trains and certifies debt arbitrators. If the company uses IAPDA certified debt arbitrators, you will know that they are current with the laws pertaining to debt, credit and collection.
3. How long will the process take? While you will be paying your settlement company monthly, they may be holding it in an account and not forwarding it to your creditors. This is because they have negotiated with your credit card companies to be able to pay a one time lump sum. Depending on what you owe, this process may take a few years. Make sure to ask about any fees that you may accumulate in this time. If you feel you can get debt free faster on your own, debt settlement might not be the right answer for you.
In addition to talking to the companies directly, contact the Better Business Bureau for each settlement company that you are considering. This will help you gauge the company’s reputation and will help alert you to problems that other individuals have when they settle their debt. Do an internet search on all the companies and try to find two to three recommended companies so that you can narrow down your search.
Before signing with a debt settlement company, some people attempt to negotiate debt settlement by themselves. It is a great idea to contact your creditors directly as this can save you on fees. Find others who have successfully settled with their companies. Model your request on sample letters available online. Don’t be discouraged if you cannot get a company to settle with you; some do not work with individuals but you will not know until you ask.
