Debt Settlement Explained

Comparing Debt Settlement Companies and Fees

There are over 1,000 debt settlement companies in business today. Every mortgage broker or lawyer who can’t seem to pay the bills is now incorporating debt settlement into their offerings, and there are as many different fee structures as there are companies. Some debt settlement companies charge an enrollment fee, others don’t. Some charge a monthly maintenance fee for the escrow account that you deposit your money into… others don’t.

I am shocked (literally) every day when a person tells me they don’t know how much it will cost them to participate in the debt settlement program that they chose! Every settlement program fee should be clearly laid out on the table. How much you will end up paying for a debt settlement company’s services should be known well before signing with a company, but many companies try to hide fees, or downplay back end fees.

What You Should Ask Every Debt Settlement Company

Following are questions you should ask every debt settlement company regarding their fees so you can compare apples to apples.

If the company that you are speaking to is unwilling or unable to email a total fee for their program, run. They are not being honest, or forthcoming, and there are plenty of companies that will let you know the total cost of their program up front, without any qualms.

When considering fees that a company will charge the easiest one to understand will be the debt settlement company that charges a percentage of the total debt that you enter into the program. No enrollment fee, no monthly fee… simply a percentage of your total debt. Companies who do this typically charge anywhere from 12% to 15% of the total debt entered. Easy. No fuss, no muss.

The difference between a 12% fee and a 15% fee on $30,000 worth of debt is $900. It would not be worth joining an inexperienced Debt Settlement Company to save on the fee, because they just might not save you anything in the bigger picture.

Consider The Following When Picking a Debt Settlement Company

Why is the length of time a debt settlement company has been in business so important?

Let’s assume that you are entering $24,000 dollars of debt into a debt settlement program. Let’s also assume that the company is suggesting a 30 month program. If the debt settlement company that you are speaking with cannot show that they have been in business for 30 months, then they have never successfully walked a client through a 30 month program! Not a good situation for you, the debt settlement consumer.

Longevity in the debt settlement business shows ability. Longevity in the debt settlement business shows good business practices. The longer a debt settlement company has been in business, the more you can trust in their business practices. If a company is not doing, or has not done,what they claim to be able to do, the Attorney General of any state can quickly shut them down.

The longer a debt settlement company has been in business, the deeper their relationships will be with the creditors. That’s worth MONEY. These relationships will influence the amount that each individual creditor will ’settle’ for, and they will settle for different amounts with each and every company. Long term, deep, solid relationships with the creditors will get you better settlement offers!

Any debt settlement company that has been in business for over 3 years has been in business longer than the majority of all debt settlement companies. That’s just a fact. Look for a debt settlement company who has been in business for over three years.

The debt settlement company that you sign with should handle your account from beginning to end. There are hundreds of companies out there that ‘farm out’ all of the work on the back end. You speak to a ‘consultant’ from one company, buy into their program, but then end up with another company handling your negotiations, and your settlements. All of the questions asked up front, longevity in the business, average settlement amounts (etc…), end up meaning nothing…. because you are now with a totally separate company handling the negotiations of you debt.

Debt Settlement Negotiators….

First: I absolutely HAVE to address this. Your negotiator will not be a lawyer, and any company that tells you that ‘they employ a team of lawyers’ should be forced out of business! There is not one lawyer currently worth his law degree that is a debt settlement negotiator. Debt settlement negotiators currently come from a pool of talented collections agents. When a company says they are ‘run by a team of lawyers’ or that the people negotiating their debt are lawyers… again… run. Even if you join a law firm that is doing debt settlement as part of their offerings, I can almost guarantee you that it’s not an actual lawyer doing your nogotiating for you.

Almost every debt settlement company of decent size will have a ‘lawyer’ or legal counsel employed on site. It’s another fact, but the truth is that most companies employ a lawyer for their own benefit, and their own protection. Lawyers can only practice ‘law’ in the state that they passed their Bar Exam, so if a company states that they have a lawyer, or team of lawyers as a benefit for you, it’s just not true. A good settlement company will utilize their lawyer in strategic ways to help you through your settlement program, but they will not be negotiating your debt.

You are entrusting your debt with another person. A person you have never met. How long the negotiators (in that company) been in the credit/collection business matters. Ask what the average is with the company you are interviewing.

In the end, a debt settlement company that charges more for their fee could actually save you more money in the long run than a company who charged a lesser up front fee. Experience pays!

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