Too good to be true debt elimination ads float across your TV and internet day and night with unreal promises to alleviate your unsecured debts in no time. For-profit agencies are taking advantage of consumers with quick and easy debt solutions that sometimes place the consumer in deeper debt or worse, in court. Said and done, it’s hard to distinguish the good from the bad. In these times, research should be done whenever you plan on doing business. Look for these traits in seeking a reputable agency that has your debt free existence as their best interest.
Better Business Bureau. This website should be locked in your favorites for all future business ventures. You can usually find a good reputable company through the Better Business Bureau. The BBB has a rating system based on client relations and testimonials. Reviews and consumer complaints are also published to help other consumers determine the company’s credibility. Becoming a member of the BBB is not required. It is a membership companies usually volunteer to be a part of as the BBB is known to provide accurate and up to date data on a company’s practices.
Nonprofit. Plain and simple, if you want third party help with your unsecured debts and are not interested in becoming another scammed statistic nonprofits are the way to go. Nonprofit debt consolidation agencies are everywhere but they need to be validated just like any other membership, accreditation, etc. Make sure the company is a 501c3 nonprofit agency and verify this along with their BBB rating.
Full of fees- Only $399 to start. Stop right there. Is someone really trying to charge you $400 to START getting out of debt? This is a for-profit red flag and should be treated as such. Any agency looking to charge you an enormous enrollment fee isn’t looking to help you save money. Urban myth nonprofit = free. Nice try. Even nonprofits have to charge fees but the fees should be nominal and coincide with the savings and a developed household budget that was part of a free financial analysis. Paying more than $100 to join a program is suspect. A monthly service fee too, should never be more than $50 a month. Some nonprofits go as low as $10 a month to help a client get the maximum savings from a consolidation. Bottom line, the fess should coincide with the savings.
Getting schooled. The counselors employed with the nonprofit should be certified credit counselors who have gone through a certification course and update their certs accordingly with continued training courses. If you’re working with a certified credit counselor you’ll know it. Certified credit counselors working for a nonprofit agency will more than likely start off with a financial analysis of your monthly budget, then a consolidation quote.
Cutting debt in half: If you owe it, you will pay it. There’s no such thing as walking away from a debt free and clear without consequences. Companies looking to cut your debt in half, or payback 60% of your debt are settlement agencies not debt consolidation. Sure, this has and can be done- cutting debt in half, paying back less than what you owe, etc- but at a cost to your credit score. 7 years bad credit, paid in full or not. Each account paid back less than owed will show such on your credit and be reported as a Charged Off debt for seven years.
Settling debt doesn’t help your credit. Let me ask. If you loan me $5k and after months and months of calling and harassing I pay you back $3k. Are you likely to lend to me again in the future? That’s how a lender looks at a settled account.
FREE FREE FREE: While nonprofits do have to charge something to cover overhead and payroll, all nonprofits should be providing some sort of free financial information or literature to maintain their nonprofit 501c3 license. This is required of the organization to maintain their nonprofit status. A free financial literacy guide, a free budget counseling session, or both should be provided with the free debt consultation.
If you’re trying to get rid of your credit card debt or are struggling with monthly payments these guidelines will help you find a reputable organization to assist you in being debt free without costing you an arm, leg, or your credit score. BBB rated A+, Freedom Debt Management, Inc is a nonprofit 501c3 licensed financial counseling organization. Certified credit counselors work with consumers to build a household budget and an affordable consolidation plan. Call 800.905.1563 to speak with a certified credit counselor for a free debt analysis or visit our website to complete our contact request form or LIVE CHAT with a counselor during business hours. Our nonprofit counseling services can eliminate debt and improve credit while doing so. You can be debt free, Freedom Debt can help.