When your debt reaches a certain point, it can start to feel permanent. While budgeting is a very healthy practice for consumers with and without debt, it often feels unlikely that small cost-saving measures will make a dent in thousands upon thousands of dollars in debt. This can lead consumers carrying debt to become discouraged, feeling like there’s no way to get back on financial track.
The good news is that some consumers do have success working with a debt relief program to settle their debts for less than the original balance. This strategy hinges on negotiating with creditors to accept a lower settlement. First, the enrollee deposits a set amount into a dedicated account monthly. When this account contains enough money, trained negotiators from the debt relief program reach out to enrollees’ creditors in an attempt to settle favorably. If creditors accept, the money goes toward zeroing out the debts.
But the first step—and arguably the most important factor in the outcome—is choosing the right debt relief partner. Consumers must stay vigilant against scams and illegitimate companies looking to take their money without providing the benefits of debt relief.
Here are six questions to ask when you’re considering which debt relief program to try.
Question #1: Will You Have to Pay Any Upfront Fees?
The biggest red flag in debt relief is asking consumers to pay any fees before a debt has been settled. As one attorney writes for the Federal Trade Commission, “A legitimate debt relief company won’t make you pay up front. That’s illegal.”
While debt relief programs do charge a fee for settling debts, under no circumstances should they ask you for payment before this occurs.
Question #2: Does This Program Have a Demonstrable Track Record?
Legitimate programs will have no problem demonstrating a proven track record of helping consumers. For this reason, it helps to start by learning more about industry leaders.
Pro tip: Look for programs with plenty of real client reviews and testimonials, plus collective statistics to back it up. Looking up Freedom Debt Relief reviews will reveal firsthand experience from some of the 500,000 enrolled clients who have used the program to settle their debt for less; researching the company as a whole shows that it has resolved more than $8 billion in debt. Staying informed about a given program’s track record can help protect you against fraud.
Question #3: Does This Program Highlight Debt Settlement Pros and Cons?
Like every solution, debt relief has pros and cons. The primary benefit is that it can help consumers settle significant debts for less. A significant con is that it will affect your credit score in the process. Any organization that tries to sweep the cons under the rug is not a transparent partner.
Question #4: Are They Offering Any “Guarantees”?
The Federal Trade Commission investigated a company called DebtPro 123 and charged it with scamming people via false promises. A major part of this scam involved promising it could resolve consumers’ unsecured debts. It alleged it could reduce clients’ debt by 70 to 80 percent on average.
There are simply no guarantees in the world of debt relief. Anyone who says otherwise is deceitful.
Question #5: Will This Program Stop Collection Calls?
Debt relief programs cannot stop collection calls. Consumers can protect themselves by knowing the guidelines of the Fair Debt Collection Practices Act, of course, but no legitimate debt relief company will claim to be able to stop these calls.
Question #6: How Long Will This Program Take to Complete?
Rome wasn’t built in a day, as they say. It’s unrealistic to expect major debt to disappear quickly. Expect to spend months or years building up your account before you’re ready to negotiate. Avoid any partners who emphasize that it will be “quick” or “easy.”
Asking yourself these six questions will help you choose a legitimate debt relief partner.