Are Debt Relief Programs Legit?

Millions of Americans struggle to pay high-interest debts every year. And yet, the vicious cycle continues, owing to the overspending habits and not knowing where to look.

In such times, debit relief comes across as the beacon of hope that gets people out of the deep waters. Still, there are questions raised about the debt relief company’s credibility.

We’ll shed light on the what, how, and when of hiring a debt relief company and whether it’s all worth it.

What Do Debt Relief Companies Do?

The goal of debt relief companies is to get creditors into accepting partial payments from their debtors. These companies work by negotiating on your behalf by utilizing tried and tested strategies.

Your debt relief company might tell you to stop paying debts and deposit a fixed monthly amount into an account they set up for you. They set a target for the account balance before reaching out to your creditors and offer partial repayment on the notion that the creditors might be left with nothing if you file for bankruptcy.

If negotiations succeed, you’ll only have to pay a fraction of what you originally owe. This can be between 40% to 80%.

The best outcome will be that your creditors agree to partial payment and close your accounts. However, each closed account will negatively impact your credit score. Moreover, your debt relief company will demand a setting up and maintenance fees for settling your account and can range from months, based on the negotiated terms.

Signs the Debt Relief Company Is Legit

A legitimate and legalized debt relief company has the rules and regulations down cold. So, before signing up a client for their program, they perform the following things:

  • Explain their fee structure
  • Tell the potential outcomes (both good and bad) of their services
  • Outline the associated costs of working with them

Furthermore, legit companies perform a thorough evaluation of your financial situation. They will review the potential outcomes to layout the complete picture in front of you.

Signs You Might be Getting Scammed

Nothing in life comes for free. And like anything that involves communicating with strangers, debt relief programs can be fraudulent, too. The key lies in knowing when you might be getting scammed.

  • Asking for upfront payment

    Authorized debt relief companies seldom ask for upfront costs. Instead, they only collect fees after securing a negotiation agreement with creditors. So, look for signs of a scam if a company asks for voluntary donations or payments.

  • Contacting via phone or email

    Companies that try to cold-sell their services via phone or email might be scams. Therefore, it’s vital to research a business before signing up for its services.

  • Promising guaranteed results

    There are no guarantees with the debt negotiation process as many financial aspects like your credit score and history come into play. That’s why anyone suggesting you’ll be out and away with debt in no time raises questions on their trustworthiness.

  • Demanding financial details before explaining services

    Legitimate debt relief programs are crystal-clear about their costs, services, and offerings. So, unless you have a clear idea of what the company provides, giving financial details to them can lead you to a bigger financial implication than you’re currently in.

  • Enrolling without reviewing your financial situation

    Immediately asking you to sign up and connect with an advisor is a pressure tactic many scammers use. Since you’re already looking for a way out of debt, it’s easier to fall into this trap. But you must understand how a legit company works. Therefore, any fee requiring payment information like a credit card, account numbers, etc., can't be trusted.

Is Signing Up for a Debt Relief Program Worth It?

Is Signing Up for a Debt Relief Program Worth It?

  • Your settled accounts might take up to seven years to disappear from the credit report.
  • Your credit score will face a negative impact.
  • Your creditors may not cooperate in working with your preferred debt relief company.

Final Word

With everything that’s said, making a choice lies in your hands. But it’s better to choose when you know what’s right and wrong, what’s white and black, and all the gray in between.

In the end, it’s your instincts and luck against the company’s expertise you choose to represent you. However, when you select a reliable debt relief company like Debt Free Life Inc, you can rest assured of getting the complete picture of the entire process from the start to the end.