Best Debt Settlement Companies
How to Choose One

The best debt settlement companies offer a needed and useful service in assisting those who have acquired an unsustainable debt load and simply don’t have the means to repay the debt yet do not meet the means testing to file for bankruptcy.

Choosing a reliable debt settlement company will be getting much easier for the consumer beginning in September and October of 2010 when new Federal Trade Commission rules go into effect that put additional restrictions on these debt relief companies.

Characteristics of a Good Debt Settlement Company

The Better Business Bureau receives thousands of complaints about debt settlement companies every year so it behoves the consumer who needs debt settlement to do some serious research.

Here is our list of things you will find top debt settlement companies doing. Before you engage one of these firms talk with a representative and make they follow these protocols. Get every thing in writing.

• They do not charge any upfront fees—this will become illegal for most companies starting in October 2010.
• They will place your payments in an account with a non-affiliated financial institution.
• The money in your account will be accessible to you for withdrawal at all times.
• The company discloses to you clearly how much you will need to save before they will attempt to settle your debt.
• They have established good relationships with credit card companies and other creditors.
• They provide full and clear disclosure of all costs associated with their services.
• They make you fully aware of how long it will take to reduce your debt load.
• They include the impact of fees paid when making claims about the amount of money saved.

Look Out for Bad Practices

Here is a list of things that many unreliable and unscrupulous debt settlement companies might try to do. Any of these should set off alarms and get you running the other direction as fast as you can.

• Charge large up-front fees before providing and services.
• Make unreasonable claims of the amount you might be able to save.
• Charge hefty monthly service fees to your account.
• Make promises that your credit history, credit rating, or credit score will suffer no ill effects.
• Tell you to stop making payments to your creditors.
• Telling you a creditor will not sue you for not paying your debt.

How Debt Settlement Works

Basically a debt settlement company will setup an account where you will put money. When the sum in that account reaches a predetermined level the settlement company will go to your creditor and try to negotiate a payoff amount that is less then you owe.

A reliable debt relief company will leverage a good relationship with creditors to negotiate a cash payoff of your account at some amount below the full account balance. They will charge you for their services either based on percentage of the money saved or an set fee amount.