Three Tips on Finding the Best Debt Settlement Companies

In an uncertain economy, debt settlement can be a sound prescription toward achieving financial wellness. The debt relief solution has triumphed as a bankruptcy deterrent for millions of Americans burdened by credit card debt. It's widely favored because it provides a more substantial debt reduction than a credit counseling debt management plan. Additionally, it assures credit card companies and other creditors a greater assurance of collecting faster payment. But, not doing your homework to locate the best debt settlement companies can be a prescription for disaster.

The Internet is a great place to start your search. Although their aim is to negotiate with creditors a massive debt reduction of your total debt, including the interest, principal, and fees, no two companies are entirely alike. There are key differences in their customer service, negotiation strategies, and fees. Thus, online research is a must to properly compare your options.

These three important tips will help boost your research:

1. Never Pay Excessive Fees

According to federal regulations, debt settlement fees must be based on the amount of the debt enrolled in the debt settlement program. The industry average in fees is 15% of the total enrolled debt. But, numerous companies exploit consumers with exorbitant fees. Any fee over 15% is considered excessive. For example, an 18% fee on a $30,000 debt would end up costing you $5,400. A high fee is also a sign that the company may outsource debt negotiations to a back end provider, thus increasing operating costs. Or perhaps the company splits fees with a referral affiliate and passes the additional cost on to you.

In contrast, the best debt settlement companies can charge lower fees because they don't need to farm out their services. Plus, most of their business comes from word of mouth.

2. Avoid Debt Reduction Programs That Are Over 36 Months

Debt settlement programs are designed to be completed in 36 months. The best debt settlement companies complete their programs in 12-28 months because it helps their clients pay less in credit card fees and interest charges. They also recognize that extending their programs to 48 months or more increases the risks of collection lawsuits. Thus, the sooner you can settle your debt, the more money you will save and the lesser potential of a property lien or wage garnishment.

3. An In-House Debt Negotiator Gets You the Best Results

You'd be surprised to learn that many debt settlement companies outsource the most vital component of their services, which is debt negotiation. Even debt settlement law firms often contract out debt negotiations to third party negotiators.

Only the best companies make it a priority to have trained debt negotiators on staff. The degree of experience of the negotiator really counts. In the event a credit card company serves you a collection lawsuit, in lieu of letting it become a judgment, a strong negotiator can help you reach an out of court settlement. Good professional assistance will also make all the difference in the world to increase your chances of a good settlement.

So, remember to do your homework on your debt relief options. Shop around and compare price, debt settlement program lengths, and reliability. You'll be glad you did.

Vic Chevalier is an author, who writes about bankruptcy alte
atives and finding solutions to achieve financial prosperity. If you're comparing debt relief options, he encourages you to call a DebtFreeLeague.com debt relief specialist today for a free financial consultation.