Anyone who has been wading through pools of debt for any length of time knows the stress and disruption it can bring to your daily life. After a while, all you want is a solution to your problem, an end to all the phone calls, bill statements and craziness.
Enter the debt settlement company. They will actually get right in there and negotiate with your creditors on your behalf to help you get your situation under control and get those debts paid off faster.
Sounds too good to be true, right? It doesn’t have to be, but in most cases it certainly is. Here are some signs to watch for that may persuade you to take your situation and your money elsewhere.
Lots of Guarantees
If you are being guaranteed everything under the sun right from the start, take it as a big red flag. Some debt settlement companies will guarantee that all of your creditors will settle for a lesser amount. They guarantee you’ll be debt free by a certain date or they guarantee you’ll only pay ‘pennies on the dollar’ to get it all worked out.
Guarantees might make you feel better about your situation, but in reality there is no way for any debt settlement company to know if all your creditors will settle ahead of time. And since they can’t know that, they also can’t know how long the process is going to take.
They Want All the Money
Some debt settlement companies instruct you to stop making the payments on all your various debts and just give them the money instead. The premise is that once you’ve built up an amount that they consider good enough, they will approach your creditors and offer it to them as a lump sum settlement. The idea is that the creditors will accept the lump sum and your accounts are marked as paid in full.
Of course, the main issue with this strategy is that your credit rating is being damaged the whole time you aren’t making payments to your creditors. Not to mention, the creditors may not even accept the amount being offered. If the company is also charging you high fees for this service, it’s a sure sign you’re in the wrong place.
So… What Should I Do?
What you need is a debt management plan that will help you get out of debt, not a bunch of promises and guarantees that may or may not come true. Ask a lot of questions and find out right from the start how they plan to attack the problem. Contact the Financial Consumer Agency of Canada (FCAC) and/or the Better Business Bureau (BBB) to find out if the company you are looking to send your hard earned dollars to is actually reputable or has any complaints made against them.
If you get into a conversation and it sounds more like a marketing presentation for their services than it does a plan to help you, go find someone else. The credit counselling services we offer at CCSAC provide an assessment first. This way, you can proceed with the most efficient and realistic plan for your unique situation.