In a previous post, I addressed the various types of debt relief that are available. Once you’ve chosen the best method to pay down your debt, the next step is to make sure you’re working with a reputable and reliable debt relief company.
This is one of those situations where a little common sense and some research will be invaluable.
Go with your gut
Follow the old adage of, “If it seems too good to be true, it probably is.” If a company is making you promises that sound so great you can’t believe it, then don’t. If you’re gut is telling you something isn’t right, go with that feeling. It’s important to remember that you didn’t get into debt overnight, and you’re not going to get out of debt overnight either.
Research Debt Relief Companies
Before you commit yourself to working with a company, learn about your state laws regarding debt relief agencies and research the company.
Research state and national regulations. Find out if your state has laws in place to regulate the industry. Does your state require a company to have a license? To make certain disclosures to consumers? To cap their fees at a certain amount? If so, ask the company if they are licensed and how much they charge for services. Ask for details of any debt relief plan in writing before you sign anything.
You should be able to find out about the applicable laws in your state by contacting your state Attorney General’s office.
Research the company. If you have a local consumer protection bureau or alliance, check with them to see if they’ve had any complaints about the company.
On a larger scope, find out what kind of rating the company has with the Better Business Bureau. You can also see how many and what kind of complaints have been filed against the company and if they were resolved. Check with the Federal Trade Commission and your state Attorney General’s office to find out if they have received complaints about the company.
There are some common warning signs that a company may not be reputable. Be wary if a company:
- Cold calls or solicits consumers out of the blue.
- Charges high fees, especially if the fees are paid up front.
- Asks consumers to sign over power of attorney.
- Will not send free information about their services and fees.
- Encourages consumers to sign up for a plan or program immediately without first sending the consumer the program’s details in writing.
- Pays their employees based on commission.
- Don’t offer financial education as part of their plan or program.
Your best bet is to work with an accredited, non-profit company that has your best interest at heart. Make sure you feel comfortable with the company. Remember, this company is going to be helping you to work through a difficult financial situation, and you want to be sure that you’re truly going to get reputable help.
Online Resources to help you research debt relief agencies
Kristen Doerschner is the public relations coordinator for a non-profit debt relief agency and a freelance writer. Through her writing, Kristen covers a variety of topics, but specializes in issues related to financial education.