May 3, 2005
10 Important Questions to ask Debt Settlement Companies
Starting in a debt negotiation program is the first step to your debt freedom. Finding the right company is critical to your success. Chances are you have never had to deal with a choice such as this before and are uncertain as to what type of questions to ask or what to look for.
To help, I have put together a list of questions to ask and things to watch out for when talking to a debt negotiation company. Before you sign up with any company you should be sure that they have your best interests in mind and are working to get you out of debt as fast as possible.
The 10 questions below are provided for your use in choosing a company. If you don't know to ask these questions it is likely that most companies won't cover all of them during your consultation. Make sure you are getting all of the correct information you will need to make an informed decision.
1. State of residence: Ask, "Does it make a difference what state I live in?"
The answer should be "Yes, it does". Every state has different laws and regulations about what the creditor can and cannot do. In a state such as Illinois for example, the laws are very strict and afford the consumer less protection than other states. This account would need to be handled differently than in a state that is friendlier to consumers.
2. Up-front fees: Ask, "Do you have up-front fees?"
Be sure to find out what portion of the initial payments goes to their fees rather than towards settling with your creditors. The first six months or so can be crucial in determining the success of a debt negotiation program. If the bulk of the initial payments are upfront fees then little is left for resolving your debt. Some companies charge up to 15% of your total debt in upfront fees, so find out. If they are vague, ask to see their contract.
3. Monthly Service Fees: Ask, "Do you have any monthly service fees?"
There is no reason that a company should charge a monthly service fee, other than to make money for the company. The key to a successful debt settlement program is speed of settlement. The more you pay a company prior to the actual settlement in "service fees" or "carrying charges" the less you have to settle with. Companies that charges ongoing service fees are less motivated to settle your accounts. A company may charge a modest set-up fee, but the bulk of its fees should be earned after a settlement has been reached.
4. Control of your money: Ask, "Do I keep control of my money in my own bank?"
Find out if you retain possession of your own money or if you send the company money to be held on your behalf. Ideally you would save the money towards settlement in your own personal account. If they hold the funds and send the payments on your behalf, then ask, "Are you licensed to do so?" In most states companies that make payments to creditors on a debtor's behalf are termed "Pro-Raters". As such they must be licensed. Also find out where you money is held and if you have access to it. You should ask, "What type of account statements will I receive?" One drawback to allowing a company to hold your settlement funds for you is that they can execute a settlement without your full approval. If you retain possession of your money then the settlement payment remains under your full control. With PBS you retain total possession and control of your money and what settlements you accept.
5. Possible legal trouble: Ask, "Could I get into legal trouble?"
See how they answer. Are they straightforward? Do they avoid the question? Do they say, "Why do you ask?" Creditors do have the right to pursue the collection process and you need to know your rights as well as what potential problems could occur.
6. Impact on credit score: Ask, "Will this affect my credit score?"
For many this is not an issue as their personal hardships and the financial burden debt places on their lives outweigh the value of a credit report. The truth is that a debt settlement program will have a negative impact on one's credit. Beware of negotiation programs that lead you to believe otherwise and promise to fix your credit or force creditors to give you a positive rating. A company MUST be licensed to engage in credit repair and should not hint to do so if they are not. At PBS our mission is to get you out of debt as fast as possible and to live free from the debt trap.
7. One person to deal with: Ask, "How many people will be working on my account?"
Will you get bounced around between all their different customer service personnel or will you have just one person who will be speaking to your creditors on your behalf? Some companies even hire outside people working from home to negotiate your debts. At PBS you are assigned a Case Manager and always have a direct line to your Case Manager and their assistant.
8. Program length: Ask, "Does it matter how long it takes me to get through the program?" "Will there be potential problems if the program goes on for a long time?"
You need to be aware that in almost all states, doing a program longer than 30 months can be dangerous for you. Spreading the program over 36, 48 or even 60 months will create legal problems, increase costs and increase the possibility of you filing for bankruptcy. The longer a program takes the higher the probability rises that you will experience failure.
Additionally longer programs result in reduced or negligible savings due to mounting credit card interest and fees. Some companies pay no regard to this and push you to get started so they can collect set-up and generate monthly charges. A debt settlement program should not exceed 30 months in length. The only exceptions might be in cases of extreme hardship, even then a projected program completion greater than 35 months is not recommended.
9. Handling creditors: Ask, "Does it matter which creditors I have?"
The wrong answer would be "no" or "not really". Any company that would say that is either inexperienced or is not being up front with you. All creditors act differently, settle differently and collect differently.
10. Qualification process:
This is not an item you would inquire about; it is one that you should observe during the sign up process or consultation. If the company does not do a thorough job of determining your suitability for a program then it is the wrong company for you. Debt negotiation is not necessarily the way to go for everyone - it is important to make sure that a company only enrolls those who need the service and qualify for the service. A company that adopts a "come one - come all" approach with new clients is doing a disservice to those in need. At a minimum the company should inquire as to hardship, recent card activity and your financial ability to save money as well as cover the points listed above.
Being in debt and financial trouble is never an easy position. In deciding upon the right remedy it is important to have the correct data. I would be happy to answer these and any other questions you have about debt negotiations. Please feel free to give me a call.
Best Regards,
Jae Burnham
Senior Debt Consultant
Professional Business Solutions
800/404-8687 ext. 286
Jae@edebtfree.org
http://www.edebtfree.org/new/
To help, I have put together a list of questions to ask and things to watch out for when talking to a debt negotiation company. Before you sign up with any company you should be sure that they have your best interests in mind and are working to get you out of debt as fast as possible.
The 10 questions below are provided for your use in choosing a company. If you don't know to ask these questions it is likely that most companies won't cover all of them during your consultation. Make sure you are getting all of the correct information you will need to make an informed decision.
1. State of residence: Ask, "Does it make a difference what state I live in?"
The answer should be "Yes, it does". Every state has different laws and regulations about what the creditor can and cannot do. In a state such as Illinois for example, the laws are very strict and afford the consumer less protection than other states. This account would need to be handled differently than in a state that is friendlier to consumers.
2. Up-front fees: Ask, "Do you have up-front fees?"
Be sure to find out what portion of the initial payments goes to their fees rather than towards settling with your creditors. The first six months or so can be crucial in determining the success of a debt negotiation program. If the bulk of the initial payments are upfront fees then little is left for resolving your debt. Some companies charge up to 15% of your total debt in upfront fees, so find out. If they are vague, ask to see their contract.
3. Monthly Service Fees: Ask, "Do you have any monthly service fees?"
There is no reason that a company should charge a monthly service fee, other than to make money for the company. The key to a successful debt settlement program is speed of settlement. The more you pay a company prior to the actual settlement in "service fees" or "carrying charges" the less you have to settle with. Companies that charges ongoing service fees are less motivated to settle your accounts. A company may charge a modest set-up fee, but the bulk of its fees should be earned after a settlement has been reached.
4. Control of your money: Ask, "Do I keep control of my money in my own bank?"
Find out if you retain possession of your own money or if you send the company money to be held on your behalf. Ideally you would save the money towards settlement in your own personal account. If they hold the funds and send the payments on your behalf, then ask, "Are you licensed to do so?" In most states companies that make payments to creditors on a debtor's behalf are termed "Pro-Raters". As such they must be licensed. Also find out where you money is held and if you have access to it. You should ask, "What type of account statements will I receive?" One drawback to allowing a company to hold your settlement funds for you is that they can execute a settlement without your full approval. If you retain possession of your money then the settlement payment remains under your full control. With PBS you retain total possession and control of your money and what settlements you accept.
5. Possible legal trouble: Ask, "Could I get into legal trouble?"
See how they answer. Are they straightforward? Do they avoid the question? Do they say, "Why do you ask?" Creditors do have the right to pursue the collection process and you need to know your rights as well as what potential problems could occur.
6. Impact on credit score: Ask, "Will this affect my credit score?"
For many this is not an issue as their personal hardships and the financial burden debt places on their lives outweigh the value of a credit report. The truth is that a debt settlement program will have a negative impact on one's credit. Beware of negotiation programs that lead you to believe otherwise and promise to fix your credit or force creditors to give you a positive rating. A company MUST be licensed to engage in credit repair and should not hint to do so if they are not. At PBS our mission is to get you out of debt as fast as possible and to live free from the debt trap.
7. One person to deal with: Ask, "How many people will be working on my account?"
Will you get bounced around between all their different customer service personnel or will you have just one person who will be speaking to your creditors on your behalf? Some companies even hire outside people working from home to negotiate your debts. At PBS you are assigned a Case Manager and always have a direct line to your Case Manager and their assistant.
8. Program length: Ask, "Does it matter how long it takes me to get through the program?" "Will there be potential problems if the program goes on for a long time?"
You need to be aware that in almost all states, doing a program longer than 30 months can be dangerous for you. Spreading the program over 36, 48 or even 60 months will create legal problems, increase costs and increase the possibility of you filing for bankruptcy. The longer a program takes the higher the probability rises that you will experience failure.
Additionally longer programs result in reduced or negligible savings due to mounting credit card interest and fees. Some companies pay no regard to this and push you to get started so they can collect set-up and generate monthly charges. A debt settlement program should not exceed 30 months in length. The only exceptions might be in cases of extreme hardship, even then a projected program completion greater than 35 months is not recommended.
9. Handling creditors: Ask, "Does it matter which creditors I have?"
The wrong answer would be "no" or "not really". Any company that would say that is either inexperienced or is not being up front with you. All creditors act differently, settle differently and collect differently.
10. Qualification process:
This is not an item you would inquire about; it is one that you should observe during the sign up process or consultation. If the company does not do a thorough job of determining your suitability for a program then it is the wrong company for you. Debt negotiation is not necessarily the way to go for everyone - it is important to make sure that a company only enrolls those who need the service and qualify for the service. A company that adopts a "come one - come all" approach with new clients is doing a disservice to those in need. At a minimum the company should inquire as to hardship, recent card activity and your financial ability to save money as well as cover the points listed above.
Being in debt and financial trouble is never an easy position. In deciding upon the right remedy it is important to have the correct data. I would be happy to answer these and any other questions you have about debt negotiations. Please feel free to give me a call.
Best Regards,
Jae Burnham
Senior Debt Consultant
Professional Business Solutions
800/404-8687 ext. 286
Jae@edebtfree.org
http://www.edebtfree.org/new/
# posted by Sponduliqs @ 8:41 AM 
Comments:
<< Home
So were you (Or anyone else for that matter) looking for for information on Free Settlement Info ? If so , please see the link about cash payout settlement structured . Any questions, just ask!
Post a Comment
# posted by 
: 7:07 AM
: 7:07 AM Subscribe to Post Comments [Atom]
<< Home
Subscribe to Posts [Atom]