Debt relief companies (also known as debt settlement companies, debt negotiators, or debt adjusters) are enterprises that help you settle or negotiate debts with your creditors. They may work with a number of financial specialists including credit counselors or anyone else the debt relief company deems important to the specific case they’re handling.
They assist with a variety of methods including counseling, negotiating with your creditors, and helping you with legal matters. Not all debt relief companies employ the same methods towards helping you reduce or eliminate your debt. While these companies have allowed millions of debtors some breathing room and have helped countless people get their finances on track, debtors have often found themselves in a worse financial position after an interaction with a so-called debt relief company.
Can you trust debt relief companies?
Every industry has its share of bad eggs. A number of predatory debt relief companies have caused a good deal of distrust towards the practice. You should avoid dealing with a debt relief company that asks for any advance fees or makes any unrealistic guarantees.
Instead, be sure to check out 3rd party reviews of the business to ensure that a good number of their clients are satisfied with the services. Check the average and negative reviews as well to offset the possibility that the debt negotiator is making false reviews on the site. You should also check with state regulators to see if the debt relief company you are interested in is licensed in your state. Lastly, make sure to go with a service that won’t collect any fees unless results are delivered.
What are the risks of going with a debt relief service?
A small amount of risk is always involved when you attempt to renegotiate your fees, regardless of whether or not you go with a debt relief company or do it yourself. A legitimate business will always acknowledge that risks can be involved as well. Some of the risks include:
- Creditors taking more aggressive tactics against you
- Inability to settle all debts
- A worse credit score than when you started, though you may be debt-free
- Unforeseen excessive fees
- Tax implications for debt forgiveness
Millions of Americans however have had great results with legitimate debt relief companies. If expectations are kept realistic client experiences tend to be overwhelmingly positive especially if fees are only charged when the debt negotiator is able to produce results.
Are there alternatives to debt relief companies?
A number of alternatives to debt relief companies are available. A number of non-profit groups specialize in services similar to that of many debt relief businesses. They will typically help you create a plan with your creditors as well as provide you with counseling. Some attorneys also specialize in the same services as specialized debt companies and a few may even work pro bono. Of course, you could also attempt to call you’re your creditors to see if they would be willing to give you better terms on your loans.
Note that none of these alternatives are necessarily risk-free either and they may also carry the same if not worse risks than going with a licensed debt relief service with a good track record.