The job of a debt settlement company is to make your financial situation look desperate so that the creditor will have no option but to agree to the settlement amount. In the mean time, the debt settlement company will ask you to deposit some money into your account every month until it reach an acceptable level of lump sum amount for the creditor to approve.

It is best not to hire a debt settlement company that contact you first through phone or catalogs in the mail box. You should be the one that will contact them first for their debt settlement services. You should always seek consultations with several companies so that you can fully understand the company’s capability in helping you to settle the debt. The first consultation is usually free and you can take advantage of this time to ask as many questions as you want. For example, you can ask questions about their background and learn when they are established.

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You can also ask questions about their employees. The employees in the debt settlement company must receive proper training and have understanding about personal finance. The company must be equipped with negotiators that are IAPDA certified. IAPDA certified negotiators have good understanding of the debt settlement laws. They must inquire about your debt and fully understand your financial situation before they are able to help you.

You can ask them about how much percentage of fees they will take from you if they successfully help you to settle the debt. The average fee charged by a debt settlement company is about 13% – 35%. For example, if they help you to settle a $100,000 debt and the fee is 20%, they will collect a fee of $20,000. If the debt settlement company attempts to collect a fee upfront, it is red flag because a legitimate company will only collect the fee when the debt is settled. You are not supposed to pay any fee including upfront fee or monthly fee until the debt is settled.

To make sure the company can help you to settle the debt with your creditor, you should ask them to show you their portfolio. They must have a track record of helping many clients to successfully settle the debt in the recent months. Usually, a bad company will have many complaints posted on the BBB page so you should do a search on the company at the BBB website. You can check the accreditation of the debt settlement company at the official sites of USOBA and TASC.

You should avoid a debt settlement company that claim they can help you to settle the debt through a government program as there is no such program. You must always remember that a legitimate company will never make any guarantee to settle your unsecured debt. Debt settlement works for you if you can afford to make the monthly payment. It is going to be expensive because you have to pay a large amount of money at one time instead of many small payments as the credit card installments.