Your bills are overwhelming now, and you no longer believe you can pay them off by yourself. Debt relief seems like just the ticket, but you’ve heard of scams and want to make sure you choose the best, most credible company out there. Well, here are the best US News debt relief offers – and more.
What is Debt Relief?
Also called debt settlement, this financial solution calls for you to hire a company that will approach your creditors – typically credit card issuers – about allowing you to “settle” your unsecured debts for a portion of what you owe. Creditors usually go along because they know that if you file bankruptcy, they may get nothing.
How Does Debt Relief Work?
While your company goes to bat with your creditors on your behalf, you’ll be asked to deposit money into an escrow-type account. Once you’ve accumulated a sufficient amount, the funds can be used as leverage during negotiations. After each prospective deal is struck, you’ll be asked to sign off on it. Then, the money will be withdrawn from your savings for disbursement to your creditor.
Won’t This Hurt My Credit?
It’s true that the process of debt relief will damage your credit – in the near term. Once your debts are settled, you can begin to rebuild your credit. It’s also worth remembering that your scores have been depressed for some time now anyway.
Do Companies Charge for Debt Relief
You will have to pay for debt relief services. However, a legitimate company will not charge you until your debts have been settled. In fact, it’s illegal to do otherwise.
In general, debt settlement companies usually will bill you a 15 percent to 25 percent fee to negotiate a debt reduction. This will be a percentage of the original debt total, or a percent of the total agreed upon. Popular debt programs include www.FreedomDebtRelief.com, which has an average fee of 21.5 percent.
How Can I Avoid Scams?
It is true that there are unscrupulous types out there who wish to separate you from your money, with little to no work performed. In fact, if you aren’t careful, you could wind up in even worse financial shape.
With that in mind, here are some red flags to look for:
- Charges you in advance. It bears repeating that it’s unlawful for a debt settlement company to bill you before negotiating a settlement.
- Over promising. By their very nature, negotiations cannot be “guaranteed” to succeed. However, debt settlement is often a winning strategy largely due to the fact that most creditors will take “something” over the “nothing” you’ve been paying.
- Telling you they can remove negative items from your credit report. If the debts are legit, they will remain on your credit report until they drop off automatically over time. No one can remove them.
- Lack of transparency. Debt relief companies are obliged to present to you in writing what services they will perform for you, and how much such services will cost.
Best US News Debt Relief Offers
U.S. News looked into top debt relief agencies in the United States and assessed them based on factors including debt types settled, minimum debt requirements, fees, customer satisfaction, and how much time debt settlement takes.
Remember we mentioned how important accreditation is in terms of choosing a legitimate company? Well, with its membership in both the American Fair Credit Council and the International Association of Professional Debt Arbitrators, Freedom Debt Relief came out on top in that category. It’s an important distinction.
Based in Arizona, the accredited agency has enrolled more than 650,000 consumers like you. Since 2002, it has resolved more than $10 billion in debt.
When perusing U.S. New debt relief offers, you’d be wise to take a closer look at the company that boasts more accreditation than the competition. Perhaps more than any other financial industry, debt settlement is rife with scammers. That makes it incumbent upon you to make sure the company you choose to settle your debt is on the up and up.