How to choose the right debt settlement company for you

Shopping for a debt settlement company is inherently linked with the stress of handling serious personal finance issues and the fear of potential consequences. But there are a few aspects to focus on when choosing the best debt settlement company to make the process easier.

Consider minimum debt requirements

Debt settlement companies carry varying requirements when it comes to the amount and type of debt that you have. Before moving forward with one, it is important to confirm that it will work with you to address your financial needs. Most companies tend to handle unsecured debt, such as medical bills or credit cards.

Here are some common requirements to look out for when applying:

• Have eligible debt, this tends to be unsecured debt.
• Be willing to settle anywhere between 10 and 50 percent of your debt.
• Be unable to make monthly payments.

If you have a smaller amount of debt look out for companies that cater to small minimum amounts. Freedom Debt Relief, for example, carries a minimum of $7,500, lower than other competitors in the space.

Inquire about time frames

Unfortunately, settling your debt is not a quick process. When entering this option, it is important to prepare for the long haul as you don’t have much control over the time it takes. In some cases, the entire process of settling your debt can take three to four years.

Comparing time frames from different companies can help you make the best choice for your needs. Accredited Debt Relief, for example, claims it can get clients out of debt in as soon as 12 months, ideal for someone in a time crunch. Whereas Pacific Debt Relief has a longer minimum timeline of 24 months.

Compare fees

If you are already in a precarious financial situation any more incurred costs can create additional problems. With this in mind, it is important to pay close attention to any potential fees charged by the companies.

When working with a debt settlement company you can expect to pay standard fees which generally fall between 15 and 25 percent of your enrolled debt. So if you were settling $10,000 you could pay anywhere from $1,500 in fees. On top of closing fees, there will likely be account maintenance fees. But keep in mind that no major fees should be charged upfront.

Look for guarantees

Those looking for an added layer of protection should pay attention to companies that offer guarantees. This means that the company will not enforce fees for more than the amount that you enrolled with if they can’t settle it.

Some companies also promise no additional fees to you on what isn’t settled.

Check complaints

Company websites tend to put the best foot forward when it comes to their offerings. But you can’t always trust what you read, especially when it comes to debt settlement. With this in mind, it is important to check the credibility of companies before signing off to work with them.

When researching, look for reliable sources, such as the Consumer Financial Protection Bureau which holds financial organizations accountable and will present a database of common complaints. The Better Business Bureau and other review sites will also have a wide range of comments and complaints on companies you are considering.

Additional features

While debt settlement companies present you with the same outcome, the road to getting it is not consistent. Consider the following special features when choosing between options.

• Team experience. Working with a company that has untrained consultants can create more issues when it comes to negotiation. Request background information on any debt consultant you are matched with.
• Customer service. A company with poor service or the inability to answer your questions is a red flag. Look out for options that have clear business hours and representatives that are ready to help.
• Length of time in business. A longer track record reveals a strong history of helping clients with their debt settlement.
• Accreditation. There are a few associations that increase reliability in the space. Primarily, The American Fair Credit Council (AFCC), as companies can only join if they are in strict compliance with the Federal Trade Commission. Membership in The International Association of Professional Debt Arbitrators is also a green flag.