Planning for Your Child’s Future

What To Look For In A Debt Resolution Company

If you have a number of debts that you simply cannot pay, then you may want to think about filing for bankruptcy. If this option is unattractive to you, then you do have the option of working with a financial debt resolution company. There are many of these companies that offer debt relief through structured settlements that are worked out with credit companies that you owe money to. You do want to make sure that you do not just choose any resolution company. There are several features you should look for like the following.

No Guarantees

While it may seem odd that you would want to work with a debt resolution business that does not guarantee a specific settlement or debt relief within a specific period of time, this is exactly what you should look for. The truth is that there is no guarantee of success, and you want a business that will tell you this up front. This indicates honesty during the process. 

There is no guarantee, because credit card and loan companies have no obligation to accept an offer that is presented to fulfill the debt. However, the debt resolution business does have experience in settling debts and working with credit companies. This means it is more likely that a resolution offer will be accepted by them at the lowest rate possible. In other words, you can expect to pay 50% or less of the debt overall when you may be asked to pay a total of 75%, for example, if you choose to negotiate on your own. 

In addition to the inclusion of no guarantees, you want the resolution company to provide you with a detailed explanation of the settlement amount before the debt is actually settled. This way you are in complete control of the process and know how much money you are paying out of pocket for each debt.

Up Front Fee Structure

Debt resolution businesses do not work for free. They will charge fees for their services. These fees can vary greatly in terms of amount and the timeframe of when they are actually charged to you. 

In many cases, the resolution business will charge a fee that is based on the amount of debt that is forgiven. This provides an incentive to get you the best possible settlement, but the fee itself can be quite hefty. For example, the fee can be as high as 25% of the forgiven debt. So, if you owe $50,000 to a loan company and 50% of the debt is forgiven, you can settle the debt for $25,000. The fee will be 25% of the $25,000 forgiven, so you will need to pay an additional $6,250. 

While this fee is steep, you are likely to pay more if you were trying to settle with the loan business on your own.