Tips for Choosing a Debt Relief Company
- UpdatedAug 17, 2023
- The best debt relief companies are transparent about their fees.
- Vet a debt relief online by checking its reputation.
- The American Fair Credit Council provides oversight for debt relief companies.
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If your debt has become unaffordable, you might be considering debt relief. Debt relief can help you get rid of debt faster – if you choose a reputable company that operates legally. Fortunately, it’s not that difficult to avoid the bad actors and find a reputable debt settlement. Just read this article for tips for choosing a debt relief company.
Why It’s Important to Find a Good Debt Settlement Company
According to the American Psychological Association's website, “Money is a top cause of stress for many Americans.” And chronic stress can quickly lead to mental health issues.
As worryingly, when left untreated, chronic stress can also cause physical conditions, including heart disease and diabetes. And it can undermine our auto immune systems, making rheumatoid arthritis worse while increasing our vulnerability to viruses like COVID.
So it’s hard to imagine that some Americans look at indebted, stressed-out fellow citizens and think, “Let’s milk these desperate suckers for every cent, and then abandon them, leaving them way worse off than they started.”
Yet such sociopaths exist. And a few of them run debt relief companies (aka “debt settlement companies” or “debt adjusting companies”).
Of course, most debt relief companies are upstanding organizations dedicated to helping people escape the stress of debt. But how can you tell those from the predators?
How to Find a Good Debt Relief Company
Your first step when choosing your best debt relief company is to go online. Search for these companies and read their websites.
But watch out for those that promise the earth. It’s a sign the people behind the company might nott deliver what you need. There’s a list of red flags you should look out for in a following section.
Once you’ve found a few companies you like the look of, it’s time to make sure they’re legit.
There are two sources that are particularly useful. They can warn you off or reassure you. They’re:
The Better Business Bureau (BBB)
Trustpilot
It’s worth mentioning one point with these and similar web searches. Don’t get too hung up over individual complaints. Every company that has tens of thousands of customers (or more) is bound to upset a few of them.
So try to get a general feel for customers’ experiences rather than focusing on a few grouses.
Better Business Bureau
Checking out a company on the BBB couldn’t be easier. You simply type in its name in one field and type in its head office’s city in another – or leave the second one blank for a list of offices.
To the right of the webpage you’ll see a heading, “BBB Rating & Accreditation.” Ideally, you want to see an A or A+ there, though some trustworthy companies can end up with a B. Below those ratings, you need to either proceed with great care or just walk away.
If it says the company is accredited, that’s a good sign. The website says, “BBB Accreditation gives consumers confidence that they’re dealing with an ethical and vetted business.”
To the left of the rating and accreditation information is a star rating for customer reviews. Look for four or five stars, which suggests very high levels of customer satisfaction.
Trustpilot
Trustpilot is the king of online customer reviews. And, while the BBB may have reviews in the hundreds or low thousands, you could see tens of thousands there.
Again, it’s best if the company you’re checking on has four or five stars. But check the Reviews bar chart below the stars. You want to see loads of Excellents and Greats, and very few Poors and Bads.
Of course, it’s highly unlikely that a company has zero poor and bad ratings. Remember: You’re trying to get a general feel for customers’ experiences.
Other sources
In addition to those online services, you can contact your state’s attorney general’s office and consumer protection office. They can tell you if they’ve anything on file concerning a company you’re considering using.
Debt Settlement Red Flags
Among our tips for choosing a debt relief company, one stands out. The one you choose must be 100% transparent about the fees it’s going to charge you for its services, and it should not try to collect fees before settling your debt.
Those predators we mentioned earlier often try to hide add-on fees. But, if they’re hidden, how can you spot them? You probably can’t. However, checking with the BBB and Trustpilot should help you avoid the worst players.
Common problem
Don’t think such predators are rare. They’re often more visible than the debt relief companies with good reputations, because the former spend more time and money on marketing. Their goal is to attract new marks, not to help customers.
Indeed, the Federal Trade Commission (FTC) says it “ … has brought scores of law enforcement actions against these bogus credit-related services, and the agency has partnered with the states to bring hundreds of additional lawsuits.”
Yes, these bad players are breaking laws. But that’s not much consolation once they have their hands on your money.
Overpromising is the biggest red flag
Look out for offers that appear too good to be true. They will be.
Federal regulator the Consumer Financial Protection Bureau (CFPB) lists some common promises and tactics that no debt relief company with a decent reputation and status will make. It says:
“Avoid doing business with any company that promises to settle your debt if the company:”
Charges you anything before it settles your debts – you should pay no upfront fees
Tells you it can settle all your debts for x percent of what you owe
Says there’s a "new government program" (there isn’t) that it can use to reduce your general debts
Guarantees it will make your debt disappear
Instructs you to cease communications with the companies to which you owe money
Promises you it’s able to eliminate all debt collection calls and lawsuits
Guarantees that your unsecured debts can be paid off for pennies on the dollar
Other red flags include:
A fast turnaround time (real debt relief isn’t instantaneous)
False promises that a company “will remove negative information from consumers' credit reports even if that information is accurate,” according to the FTC. That’s not possible
All these help you tell the predators and the good guys. None of those good guys is going to promise you anything before they’ve analyzed your finances and come up with a plan.
What you should be looking for is a company with experienced advisors who really can negotiate a debt settlement plan with your creditors – and that will provide an end-to-end service.
What Is the American Association for Debt Resolution?
The American Association for Debt Resolution (AADR) is the leading national association of debt resolution companies. The AADR and its member companies work on behalf of consumers struggling with the overwhelming burdens of unsecured debt to resolve those debts for less than their full balance.
As the leading industry trade group, the AADR supports, enforces and advocates for consumer rights for Americans with financial hardship and debt burdens.
You can look up members of the American Association for Debt Resolution (AADR) on its website’s homepage. Just carefully complete the “search by company name” field.
The AADR says its three key goals are to:
Support consumer rights
Enforce best practices
Advocate for consumer-centric policies
So the organization provides oversight for debt relief companies. And no black-hat predator is likely to become an AADR member.
Move Forward Confidently With Our Tips for Choosing a Debt Relief Company
Don’t be frozen by fear that you’re going to fall into a predator’s clutches. As the AARP says:
“There are reputable companies and organizations that can help you get out of the red. They can advise you on budgeting and money management, negotiate concessions with creditors or set you up with a plan to put away money each month to pay down your debts, usually over a period of years.”
You need to move forward quickly when things get bad enough for you to need help. And, if you follow our tips for choosing a debt relief company, you can select yours with confidence.
Are You Ready for Debt Relief?
If you’re reading this, you’ve probably decided that debt relief is a good solution for you. Getting out of debt is not easy, but once you get some breathing room you'll be on your way to managing debt better and building a more secure financial future.
How long does debt settlement take?
It depends. You may be able to settle all accounts within weeks if you have access to a lump sum you can offer your creditors – for instance, a 401(k) account you can borrow against or savings account that you can tap. Otherwise, debt settlement timing depends on how long it takes you to save an amount to offer your creditors.
You can speed this up by cutting spending, selling unused items, and taking on a side gig for more income. You’ll also stop paying your unsecured accounts and put that money into your debt settlement savings. Once you have saved enough, you or your debt settlement company can begin negotiating with your creditors.
Most debt settlements take 24 to 48 months from beginning to end.
Can a creditor sue me?
In a debt resolution program, you voluntarily stop making payments to your creditors so your accounts go past due. As a result, there’s a chance your creditors may take legal action to collect on the debt. Although we are not lawyers or licensed to practice law, we want to make sure that if any of your enrolled accounts go into litigation, the debt can still be negotiated.
That’s why we’ve partnered with a network of attorneys, the Legal Partner Network, that specialize in debt negotiation. If a creditor takes legal action, we may engage a Legal Partner Network attorney who will attempt to negotiate a settlement with your creditor.
The cost of this service is included in the program and is available to all qualifying clients.
Does enrolling in a debt relief program stop collection calls?
You can stop calls from debt collectors by asking them to and by following up with a written cease-and-desist letter. If a debt collector continues to call, it’s a violation of the Fair Debt Collection Practices Act (FDCPA) and you could sue the collection agency for damages.
However, the FDCPA doesn’t apply to primary creditors like your bank, personal loan provider, or credit card issuer. In many states, they can continue to call you whether you like it or not. And when you stop making payments to save for a debt settlement offer, your primary creditors will probably call you.
That said, once you or your debt settlement company reaches a settlement with your creditor, there is no reason for collection calls.
Debt Relief
