Debt Settlement Review

There is a 45-page downloadable document on the United States Government Accountability Office website called “Debt Settlement; Fraudulent, Abusive, and Deceptive Practices Pose a Risk to Consumers.”

In an April 2010 Senate Commerce Committee hearing consumers told of paying thousands of dollars to credit card debt settlement companies who did nothing to help them out of debt. Why then, you ask, would we take time to research these companies?

There are a couple of answers.

None of the options for those facing unmanageable levels of debt are pleasant. None of the options are going to be as easy or as much fun as getting into debt in the first place was. If you find your debt unmanageable you will very likely find yourself considering settlement, or negotiation, as one of the many unpleasant possible solutions. It is worth researching the best questions to ask.

Also, we would like to safeguard consumers from the worst of these types of companies. Choosing the wrong one could leave you even further in debt. Some of them will charge upfront fees and never lift a finger to help you resolve your debts.

Settlement differs from debt consolidation or debt management. Settlement firms try to get rid of some of your debt by negotiating a lower payoff amount, going beyond organizing your debts to make them more manageable. They also attempt to help consumers set aside money. In most cases the firm instructs consumers to stop making monthly payments and put that money toward savings instead. Once a reasonably large sum is set aside, it is used to settle the newly-negotiated, lower debt amounts.

Settlement is a major undertaking that will certainly have negative impacts on your credit score. Any time you stop making payments to a creditor they will get upset. Even if the debt is later “settled” the creditor will still note in your credit file that it was settled for less than the full amount. These notes can impact your credit score for years – just as many years as a bankruptcy — which is exactly what settlement is trying to “rescue” consumers from.

If you decide that negotiation is the right path, you will want to find a firm that is most likely to follow through on promises, helping you get on the road to financial freedom. No time to research? No worries.

At TopTenREVIEWS We Do the Research So You Don’t Have To.™

What Should I Look for in a Debt Settlement Firm?

Debt negotiation companies vary widely in what they offer and how they offer it. It is worth looking for a few key elements before deciding on a firm.  

Services
Debt settlement businesses should help you do just that – settle your debts. Believe it or not you have to verify that. There are plenty of companies that have earned a reputation for taking consumers’ money and not doing much of anything to resolve debts. In this largely unregulated business arena there are plenty of settlement firms that can leave you in a worse situation than you were in before. We looked for companies that were most likely to really help you settle your debt and do it utilizing sensible and helpful methods.

We liked firms that offered a range of options for resolving debts. Settlement really is a last resort. Offering advice and services for bankruptcy, managing debt and consolidating debt means a company can offer a legitimate opinion on what is best for you not what is best for their bottom line. They can compare settlement to other options without bias because they offer those options as well.

Costs
While each debt configuration is unique, we considered how much you are likely to pay in a given situation, whether it involves upfront fees, a percentage of your total debt or some other method of payment.

Ease of Use
You’ve already had some problems with finances. Shelling out more of your money to a settlement agency is likely to be painful. If you’re willing to do it you are likely too busy to try and negotiate with your creditors yourself. You should be able to expect your firm to do the hard work for you, leaving all your time for earning the means to get out of debt. Once you sign on you should not have to spend a moment worrying about your negotiation process. You should be able to access your information easily and securely online.

Affiliations
We considered whether the respective agencies belong to professional organizations. These groups require a certain standard for ethical behavior. Some of the weight of belonging to these groups is debatable since many are organized by folks in the industry with a vested interest in helping debt settlement thrive, but they can offer at least some peace of mind. We especially like entities that are affiliated with unbiased associations like the Better Business Bureau. Our top-ranked companies — Oak View Law Group, CareOne Services and NegotiateBills.com — all have affiliations with groups we trust. We also like companies that have been in business long enough to have a reputation. It is difficult to put your faith in months-old companies. Privacy and security features are also a must.

Help/Support 
A good debt negotiation firm should make the entire process as painless as possible with great customer service and guarantees. Friendly and helpful people should be available to customers by phone, e-mail and chat.

Even the companies who offer debt relief will usually admit that settlement should be low on a list of bankruptcy alternatives. If you are considering negotiation you have seriously weighed debt consolidation, debt management and negotiating settlements on your own.

No one means to get so far down the debt pathway that they need professional help, but if you are reading this you have likely arrived at that place. The time for prevention has passed. It is time to tackle the debts. It may be time for intervention from a debt settlement firm. Read our reviews for information about the three strongest companies — Oak View Law Group, CareOne Debt Relief Services and NegotiateBills.com.

Be sure to check out articles on debt settlement in the TopTenREVIEWS Learning Center.