How to Examine Debt Relief Providers

Find the right partner...

If you are struggling with excessive debt, it may encourage you to learn that the average American household carries $137,000 in debt across credit cards, auto loans, student loans, and mortgages. At least you aren’t alone. And this trend is unlikely to disappear any time soon. The cost of living continues to rise, as do medical costs and the rate of inflation. Put all this together and you can see why it is so difficult for individuals to get out of debt on their own. Which is why many people turn to debt relief providers for assistance.

Are you looking for a debt relief partner? It can be tough to dig through your options to find a company that works for your needs. That’s why we compiled this short guide discussing how to examine debt relief providers. With a little direction, you can find a partner to help assuage your financial frustrations.

Understanding Various Debt Relief Offerings

First things first, it’s probably wise that we cover a few debt relief offerings. Keep in mind, however, that certain persons may qualify for some opportunities but not others. A reputable debt relief provider can walk you through the process of selecting whichever option is best matched to your situation. Of course, it’s easier to be confident in your options when you understand them ahead of time.

  • Debt Counseling – Sometimes all you need is a little advice; and that’s exact what debt counseling provides. Basically, you connect with a debt expert who can help you build a budget, find educational resources, and spot promising programs that you might need. Generally, this is a free resource or consultation.
  • Debt Consolidation – If you have debt all over the place and are scrambling to keep up with what’s due when, then debt consolidation might be your best bet. Companies like Consolidation Plus, for instance, offer you a loan that pays off your creditors, while you then pay off the loan. It’s a quicker – and arguably simpler – way to pay off your dues.
  • Debt Settlement – When your debt has ballooned to a point that paying it off seems far-fetched, it’s time to consider debt settlement. Debt settlement companies negotiate with your creditors in order to lower the total amount you owe, in an agreement that you will pay off the remaining debt. Think of it like setting a bar you can actually reach. How nice is that?

Now that we’ve covered the basics, let’s move to potential red flags.

Weeding Out Scammers

Unfortunately for everybody, scammers sometimes pose as beacons of hope. This can make it difficult for debtors to differentiate between legitimate debt relief providers and clever con artists.

Here are three ways to spot a shady actor:

  • Scammers Want Payment Upfront – According to the FTC, it’s illegal for debt relief companies to demand payment before services are rendered. However, legitimate debt relief companies do charge for their services, usually between 15 and 25 percent of the debt sum. This expense is only valid if you agree to the service and the charges.
  • Scammers Forego Education & Information – A respectable debt relief company will want to understand your situation the best they can; and they will want to inform you about their processes as best they can. Scammers don’t care. They just want your money; and quickly, before you notice they are bad news.
  • Scammers Make Promises They Can’t Keep – An honest actor knows their limitations. If you work with a debt settlement company, they cannot guarantee you that they will eliminate or reduce your debt, because they don’t own that debt, a creditor does. But they can give you an assurance to try their best. Scammers aren’t interested in nuance. They would rather promise big and under deliver.

Don’t get taken for a ride. Use the above tips to spot nasty con artists.

Finding a Debt Relief Provider with a Stellar Track Record

If you want to find a debt relief partner worth your time, it helps to look up unbiased reviews from real clients on sites like Best Company, Highya, TrustPilot, or Consumer Affairs. Negative reviews are sure to surface from time to time, but make sure feedback is mostly positive.

You’ll also want to look for longevity. Freedom Debt Relief, for one, has enrolled more than 600,000 clients and became the first business in the debt negotiation industry to settle more than $10 billion in total consumer debt, according to PR Newswire.

Of course, your chosen debt relief partner doesn’t need to be a record breaker. But it does need to have a solid history of actually helping real people solve real issues.

What About Bankruptcy?

In a lot of ways, bankruptcy is a nuclear option. Yes, bankruptcy can help alleviate your debts but it’s not an option that should be deployed lightly.

Chapter 7 bankruptcy, the most common form for consumers, liquidates your assets in order to pay off creditors. This means you could lose your house or vehicle to the process. Chapter 13 bankruptcy, on the other hand, often allows you to keep your house but you may have to continue to repay debts too. Either option is likely to muck up your credit score for years to come.

If you must resort to bankruptcy, that is OK. But don’t do it before you’ve investigated your other options.

Hopefully this guide has demystified the process of examining potential debt relief partners. Remember to be discerning. It’s your financial future, after all. welcomes thoughtful comments and the varied opinions of our readers. We are in no way obligated to post or allow comments that our moderators deem inappropriate. We reserve the right to delete comments we perceive as profane, vulgar, threatening, offensive, racially-biased, homophobic, slanderous, hateful or just plain rude. Commenters may not attack or insult other commenters, readers or writers. Commenters who persist in posting inappropriate comments will be banned from commenting on