It will be utterly unwise to expect that any and every debt relief service provider you choose will be reliable and reputable to deliver you exactly what they promise. There are several companies that will not offer debt settlement programs just as the way you want.
These companies will often “guarantee” that they will settle all your debts, credit card or others within a very short time.
They will also promise that they will settle the debt for a final amount that will be 30 to 60% of the actual amount that you owe to your creditors.
These are very tempting offers made which most of the debtors fall prey to. Once these companies are able to ‘attract’ customers towards them, they start playing their usual games.
One such common practices followed by these scam debt settlement companies is collecting fees for their service from you even before they start their work or settle any of your debts successfully. According to the Telemarketing Sales Rule of FTC, it is prohibited by any such company that sells debt settlement services or any other debt relief services from charging any fee before they reduce your debt or settle it, either over phone or in-person.
Another common practice followed by these companies is that they will hide the facts from you. They will not explain the intricacies and risks associated with debt settlement or any other debt relief programs.
The different risks associated with different debt relief options that these companies refrain from explaining you include:
The difficulties involved in it
People dropping out from a program prematurely
Credit reports will continue to suffer and
Debt collectors may continue with their efforts to recover the money due from you.
And of course, there is always the risk of tem running away with your money without doing anything about your debt or debts pushing you further inside the ‘quicksand of debt.’
Research for the right company
Therefore, if you want to avoid being duped, you will need to be very sure that you have partnered with a reliable debt relief company such as debt quest. It is essential that you do your homework before you enroll yourself in a debt settlement program. This is actually a big decision that you are going to make that involves a lot of money that will be used to pay down your debt.
In order to find the right debt relief service provider all you have to do is:
Enter the name of the company you have chosen to work with in the search engine
Make sure that you enter the word “complaints” along with it
Read the results that pop up to know what others have to say about the company you are considering working with.
You will be able to know whether or not the company was involved any lawsuit in any case with any state or the federal regulators for engaging in any unfair and deceptive practices.
Check for the fees
If you go for debt settlement, the company may charge you for their services. These fees are usually charged for maintaining and administering the dedicated bank account that you may have to open to put money to pay your creditor. Since this will be done by an independent third party, you will need to be very careful with your selection.
Check for the fees and funds not only because these are yours but also because you are entitled to the interest accrued on these funds. The account administrator is also responsible for transferring the accumulated funds from your account to pay your creditors as well as the debt settlement company when the debt is settled.
Know the disclosure requirements
According to the law, there are a few disclosure requirements that every debt settlement company must abide by. The debt relief company you wish to work with must provide you all relevant info about the program such as:
The price and terms of the service provided
The results and time it will take to settle a debt or for making an offer to each creditor for a settlement
The amount of money or percentage you can save on each outstanding debt
The non-payment clause and the negative consequences as you may have to stop making payments to the creditors
The funds and interest accrued are yours
The account administrator is not affiliated with them and is not paid any referral fees and
That you may withdraw your money from your account at any time without paying any penalty.
Also know about the tax consequences of debt settlement because any savings that you make due to any debt relief program will be considered as your income by the Internal Revenue Service, depending on your financial condition. Your creditors will report the IRS about such settlement occurrences.
However, taxes can be evaded when you are declared ‘insolvent.’ Insolvency is a complex issue and hard to determine. It is actually a state when your total debts are more than the total fair market value of all your assets. You will therefore need to talk to a professional tax lawyer to find out whether or not you are eligible for such exception.
Shop with caution
Ideally, you should avoid any debt relief agency whether it is debt settlement, credit counseling, or any other service that does any of the following:
Asks for fees before any services are provided or a debt is settled or puts into a DMP plan
Asks you to make voluntary contributions instead of terming it as their fees
Advertises that there is a “new government program” to bail out personal and credit card debt
Promises it can make the unsecured debt go away
Asks to stop communicating with or paying to your creditors without explaining the serious consequences of it
Says that it can stop collection calls and even lawsuits against you if any
Promises that all your unsecured debts will be turned into pennies on the dollar making it easy for you to pay off.