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How to find a good debt settlement company
Have you seen advertisements–maybe on TV or the Internet–from debt settlement companies that promise they can reduce your debt by as much as 75 percent? Or that they can settle your debt without it affecting your credit score?
These are all false claims.
There is just no legitimate debt relief company that can cut your debt by as much as 75%. And debt settlement will definitely have an adverse effect on your credit rating and credit score. This is because in order to settle your debts, you will have to stop making payments to creditors for probably six months. Logic dictates that this is all bound to have a negative effect on your credit rating. These are claims that are never made by a debt settlement company that’s compliant with the FTC’s (Federal Trade Commission) rules and regulations.
The difference between debt consolidation and debt settlement
It is important to understand the differences between debt consolidation and debt settlement before you choose one or the other.
Debt consolidation is where you consolidate all of your outstanding debts, such as credit card debt, into one new loan. Debt consolidation loans generally come with lower interest rates and longer terms, meaning that instead of having to pay off the debt in two to three years, you have five, seven or even more years to repay the money you borrowed.
Debt settlement or debt reduction is where a company negotiates with your creditors to reduce the amount of money you owe at lower interest rates and with a better, easier to manage repayment plan.
Federal Trade Commission compliant
Debt settlement can be a very good option but only if you choose a Federal Trade Commission compliant company. This is because an FTC-compliant company will give you an honest assessment of your current debt situation. It will also explain the new personal bankruptcy laws and regulations and why it is more difficult now to get out of debt through bankruptcy. Your debt settlement counselor will explain how the process has helped thousands of individuals through the years and why you need to have a strong personal commitment to make it work.
The differences between FTC compliant debt settlement companies and the others
A company that is compliant with FTC rules and regulations will not charge upfront fees. Instead, it will provide a free, no obligation debt analysis that will include an estimate of how much money you could save with debt settlement.
In addition, an FTC compliant company won't ever “guarantee” how much money you can save you. This varies from person to person, on the amount of debt you owe and your debtors so it's just not possible to guarantee any savings in advance. Instead, it will only tell you that it will word to save you as much money as it possibly can and that you will pay nothing until you approve a settlement
How to find an FTC compliant debt settlement company
Before you choose a debt settlement company, be sure to check out its accreditation. This should include a notice that it is fully compliant with the Federal Trade commission final TSR rule 16 C.F.R. Part 310. This will ensure you that the company collects its fees only after it has completed all outstanding issues with your creditors. Its credentials should also include a link to the new FTC law. http://www.ftc.gov/opa/2010/07/tsr.shtm
Debt settlement has worked for thousands of Americans
Whether you call it debt negotiation, debt arbitration, resolve debt, or settle debt, it has worked successfully for thousands of American families and it could work for you. However, do make sure that you choose a debt settlement company that is FTC compliant.