How to Know if a Debt Relief Company is Legitimate
+25 Questions to Ask
In recent years, there has been a surge in debt relief companies offering a huge variety of services.
While this increase can be attributed to a (sadly) growing number of people who have more debt than they can handle alone, it’s essential to approach debt relief with caution.
A myriad of companies say they can assist you in getting debt relief.
Sadly, not all these companies have your best interests at heart.
As important as getting debt relief is… choosing between a legitimate debt relief company and a deceptive scheme is probably your most important action step.
It can make all the difference between
- getting to a better place in life
- just making the problem worse
What Are The Basics of Debt Relief Companies
Debt relief companies exist to assist you in trying to navigating the complex maze of debt.
Options here are various, but whether it’s
- reducing the amount owed
- consolidating various debts
- devising a more manageable repayment plan
Legitimate debt relief companies can play a significant role.
A legitimate company provides you a path toward a less stressful and more manageable debt situation.
At their core, debt relief companies act as intermediaries between debtors (i.e. you, me, us) and the creditors (credit card companies, mortgage companies, banks, credit unions, etc.
Debt relief companies work to to negotiate on the debtor’s behalf.
A debt relief company should aim for terms that might be more favorable than what the debtor could achieve alone.
You, as the debtor, might receive these terms as
- lowered interest rates
- waived fees
- a reduction in the amount you owe
The most important thing you do when looking for a legitimate debt relief company is decide if a company is genuinely poised to offer these benefits, or is a company that really is there to prey and capitalize on the desperation of debt-ridden individuals.
Because even though it’s hard to believe, there are many companies that will take you at your most stressed point in life, and put you in an even worse situation.
So, to help you avoid this, let’s dive a little deeper into how these companies work, and the markers you can use to suss out a good and legitimate debt relief company from one that might just be trying to scam you.
What Does It Mean for A Debt Relief Company To Have “Accreditation”?
Accreditation gives you a starting point for being able to know that you can trust in the reliability of a debt relief company. Accreditation acts as an external validation.
An accredited debt relief company adheres to established industry standards and practices.
I’ve seen that the most reputable debt relief companies are often affiliated with or accredited by recognized industry organizations.
Two of the top entities in this field are the National Foundation for Credit Counseling (NFCC) and the American Fair Credit Council (AFCC).
- The NFCC
Founded in 1951, is the longest-serving non-profit credit counseling organization in the U.S. Their member agencies are held to high standards of quality and integrity, ensuring clients receive professional guidance rooted in established best practices.
- The AFCC
Focuses primarily on the debt settlement industry, advocating for ethical conduct and transparent operations.
When a debt relief company boasts accreditation from either of these well known and respected organizations, it can be a positive indicator of that debt relief company’s strong commitment to genuine service and help for you.
However, while these affiliations are promising, it’s crucial to note that they aren’t the only ways to decide if a company is legitimate.
This is why it’s important to remain vigilant and consider more than just accreditation.
I like to think that most people in the world are good, while simultaneously remembering that there are always people in the world out there who do not have your best interests in mind.
So let’s look at what scammers do in the world of debt relief.
Warning Signs of A Debt Relief Scam:
Navigating anything in finances requires you to be vigilant No one has your best interests at heart at the same level that you do. But it’s hard to know what’s in your own best interest unless you get educated, so… good for you for making it this far in the article.
Over the course of my career, I’ve unfortunately encountered a plethora of deceptive tactics that prey on people who are eager for a financial breath of fresh air.
So taking some time to recognize signs of red flags can save both your money and your current and future credit score (which, like it or not, determines so much about quality of life in America).
Let’s dig some of the most prevalent warning signs that your potential debt relief company may be less than legitimate
- High Upfront Fees:
Genuine debt relief companies often operate on a fee structure that aligns with what you save when they renegotiate debt, or on another successful outcome. Beware of organizations demanding exorbitant fees upfront. They should not be doing this before any tangible service is rendered. If they’re charging you big up front fees, that model can be a warning that the company is more interested in their gain than your financial wellbeing.
- Guarantees of Debt Elimination:
As enticing as it might sound, promises of completely wiping out your debts overnight are likely too good to be true. Debt negotiations are intricate. Debt negotiations also offer no guarantees. One credit card company might be willing to provide debt relief with the company you choose, while a different lender may not. Any debt relief company offering assured or guaranteed results is, at best, likely embellishing the truth.
- Promises of a “New Credit Identity”:
This is a glaring red flag. Some fraudulent companies might tempt you with offers to create a new credit identity. This can involve illegal practices like identity theft. Not only is this deceitful, but it can also land you in legal trouble.
- Lack of Transparency or Clear Answers:
A genuine debt relief company will ensure you understand the process, risks, and potential outcomes from working with them. If your questions are met with vague responses, evasiveness, or you’re discouraged from seeking independent advice, reconsider and at least interview other debt relief companies.
- Aggressive Sales Tactics:
Financial decisions, especially those surrounding debt, should be carefully considered. Stay away from companies who use high-pressure sales techniques. If they’re urging immediate action or attempting to instill a sense of panic or urgency, they may not be legitimate. True professionals will respect your need for time to think about it.
The importance of Research – Where to Research Debt Relief Companies
Imagine getting on a boat and thinking, “I got this!” only to find out you’ve got no idea which way to go when the waves get choppy.
Diving into the debt relief world without doing your homework is a little like that… like trying to sail a boat, through a storm, without a map, and without training.
Over the years, I’ve seen folks sidestep some major pitfalls just because they took the time to research. So, in addition to the questions you can ask any debt relief company to confirm they’re legitimate (which I’ll get to shortly), here are other places you can DYOR (Do Your Own Research).
Checking with the Better Business Bureau (BBB): You may not know, but companies have to buy their listings with the Better Business Bureau Online, and pay an annual or monthly fee to do so. it is a pay-to-play system. That said, it can be one indicator and place to look. The BBB puts itself forward as a stalwart for consumer protection by working to provide insights into a company’s operational history, including any complaints or disputes lodged against them. An accredited status or a high rating from the BBB can be one indicator that the company not only meets a high level of ethical standards but also values customer satisfaction.
Reading Online Reviews and Testimonials: A wealth of information lies at our fingertips with everything available online. Websites, forums, and platforms dedicated to reviews offer firsthand accounts of experiences with debt relief companies. While reading these, it’s really important to maintain a discerning eye. Beware of reviews that are overly positive or seem scripted because they could be fabricated. At the same time, extremely negative reviews can sometimes be anomalies, so look for consistent themes when looking into specific feedback.
Asking Your Friends And Family: There’s a certain comfort in relying on the experiences of those we trust. If you have friends, family, or acquaintances who have done debt relief for themselves and they were happy with the services they got, then ask them what debt relief companies they used. Also, genuine companies should be willing, upon request, to provide testimonials or references from satisfied clients.
Confirming Physical Location and Contact Details: A legitimate debt relief company will have a verifiable physical location. Be wary of companies that are 100% online and don’t have any tangible office presence. You’ve maybe heard the expression “Here today, gone tomorrow” – that’s especially true when it comes to websites and the Internet. Ensure you have multiple ways to contact the company – phone, email, and physical address – and look up the people you’re working with to be sure they, themselves, are real people. It’s fine if they have sales staff or counselors overseas, but you should still be able to verify that they are legitimate people. In times of concerns or disputes, you want to be assured of open channels of communication.
So, now, you’ve done your research and you’re pretty sure you’ve found a legitimate debt relief company.
Here are 25 questions you can use (and some thoughts on each question – with a little humor too) to test whether or not you’re working with a legitimate debt relief provider.
25 Questions to Ask a Potential Debt Relief Company
Navigating the labyrinth of debt relief is challenging.
However, that doesn’t mean you can’t arm yourself with a quiver of precise questions to shine a light on any murky corners. From my treasure trove of experience, I’ve fashioned a list of questions that can act as your guiding compass. And remember, while asking serious questions, a pinch of humor never hurts!
- What debt relief options do you offer, and how do you tailor them to individual needs?
Good response: A comprehensive explanation of their services.
Red flag: Vague, one-size-fits-all solutions.
- Do you charge fees upfront? If not, when do you charge them?
Good response: No upfront fees, clear breakdown of their fee structure.
Red flag: Ambiguous fee details.
- How long will I be in your program?
Good response: A realistic timeframe based on your debt profile. Could be anywhere from 1-10 years.
Red flag: “Instant” or “overnight” results.
- How will your program impact my credit score?
Good response: Honest insight into potential short-term effects.
Red flag: “Don’t worry about it” attitude.
- If I’m not satisfied, what’s your grievance redressal mechanism?
Good response: Clear, client-friendly policies.
Red flag: Evasive or non-existent procedures, or they don’t understand the question at all.
You don’t have to use “grievance redressal mechanism”. You can just say “How do you fix it?”
But that particular language can make it sound like your really know your stuff.
- Are you accredited by any industry associations like NFCC or AFCC?
Good response: Affirmative with evidence.
Red flag: “What’s that?”
- Can you give me a list of client references or testimonials?
Good response: Willingness to provide.
Red flag: Immediate defensiveness.
- Where’s your physical office located? Can I visit if I want to?
Good response: A genuine address. Bonus points if they invite you for coffee.
Red flag: “We’re a strictly online entity.”
- How do you handle data privacy? Is my information secure?
Good response: Assurance with evidence of encryption and secure data protocols.
Red flag: “We have a strong password.” (or other equally vague responses)
- Have you ever had to change your company name? If yes, why?
Good response: A transparent answer if they have, or no, they haven’t.
Red flag: A convoluted story worthy of a soap opera.
- How often will we communicate about my progress?
Good response: Regularly scheduled updates.
Red flag: “When we feel like it.”
- Will I have a dedicated counselor or point of contact?
Good response: Yes, with an introduction.
Red flag: A vague “Someone will be in touch.”
- Do you provide any financial education or resources during the process?
Good response: Affirmative, with examples. A website, materials emailed or sent to you, and other help to learn more.
Red flag: “Just Google it.”
- How do you negotiate with creditors? Do you have established relationships with them?
Good response: An insightful answer showcasing expertise.
Red flag: “We wing it.”
- What percentage of your clients successfully complete the program?
Good response: A realistic, high success rate.
Red flag: Evasive or overly optimistic numbers.
- What happens if a creditor refuses to work with you?
Good response: An actionable plan.
Red flag: “We cross that bridge when we get there.”
- What’s the worst-case scenario if I work with you?
Good response: Honest potential drawbacks (and bonus points if they tell you how to avoid those)
Red flag: “Nothing can go wrong!”
- How do you handle accounts that go to collections during the program?
Good response: A strategic approach.
Red flag: “Collections? What’s that?”
- Do you have any lawsuits or complaints against your company?
Good response: Transparency about any past issues and resolutions.
Red flag: Immediate defensiveness.
- How do you ensure I won’t fall back into debt after the program?
Good response: Ongoing support and financial education.
Red flag: “That’s your problem.”
- How do you get paid? Is it based on how much debt you eliminate or some other method?
Good response: Clear and client-favorable methods – they are open and let you know how they get paid
Red flag: Murky financial details.
- What’s your success rate in reducing debt amounts?
Good response: A realistic, substantial percentage.
Red flag: Sky-high or vague percentages.
- Can I access my funds if they’re set aside for payments to creditors?
Good response: Assurance of your control over your funds.
Red flag: “It’s complicated.”
- Who holds my money while we’re working together?
Good response: A third-party escrow or trust.
Red flag: “We have a safe in the back.”And lastly…
- Can you recommend a good joke about debt or about the situation I’m currently in?
Good response: Some quip or joke that makes you smile or laugh.
Red flag: “Debt is no laughing matter.”
(Hint: Everyone needs a little humor, and if they can’t also help you find lightness in the situation, that can help you decide between companies to work with.)
So you’ve asked the questions, you’ve chosen a debt relief or debt management company, and now they’re sending you paperwork to start working together.
Evaluating the Debt Relief Contract
How often do you actually read through the entire terms and conditions before clicking “accept” on something online? We’ve all been there.
However, when it comes to debt relief, this is one document you must read. (No skimming.)
Think of the contract as your rulebook. It lays out the game plan, tells you what to expect, and sets the guidelines for your relationship with the debt relief company.
While reading, keep an eagle eye out for anything sneaky stuff. Let’s decode some potential contract language that should raise your eyebrows.
Payment Timing: “Payments will be made periodically.”
- Why it’s vague: When exactly will these payments be made? Monthly, annually, or weekly?
Services Provided:“We will provide necessary services as deemed appropriate.”
- Why it’s vague: Which services? Under what criteria do they determine appropriateness?
Cost Structure: “Additional fees may apply based on services rendered.”
- Why it’s suspicious: What are these “additional fees”? How are they calculated?
Late Payments: “Late payments may incur extra charges.”
- Why it’s suspicious: How much are these “extra charges”? Are they a flat fee, or a percentage of the owed amount?
No Clear Game Plan on Disagreements or Issues:
Dispute Resolution: “Any disputes will be addressed in a manner deemed suitable by the company.”
- Why it’s concerning: This gives all the power to the company. What’s the actual process? Is there a third-party mediator involved?
Service Failures: “In the unlikely event that our services do not meet expectations, we will work towards an amicable solution.”
- Why it’s concerning: What does “work towards” mean? What’s the specific process, and how does it ensure fairness to you, the client?
Whenever you encounter language like this, it’s a sign to pause.
Get clarity before signing.
Contracts should be clear-cut, leaving no room for ambiguities. Don’t be shy to ask for specifics and get them in writing!
A good contract is like a good story. This is YOUR life, not theirs.
The agreement you have with your debt relief company should be clear, understandable, and answer all important questions.
If you’re left confused or feeling like you’ve stepped into a financial fog, it might be time to reconsider. Seek some expert advice or a second opinion.
It’s wise to trust your gut, while simultaneously making sure everything adds up on paper!
Alternatives to Debt Relief Companies:
Debt relief companies might seem like the golden ticket to many, but there are other avenues you can explore to tackle your debt mountain. It may be worth checking out all of your options before committing. Here are some of these alternative paths:
1. DIY Debt Management:
Roll up your sleeves and get hands-on with your debt. Create a budget, prioritize your debts (think: highest interest rates first), and set up payment plans directly with creditors. It requires discipline, but it also means you’re in the driver’s seat. Tools like YouNeedABudget.com and Mint.com can be very helpful in managing your own debt.
2. Credit Counseling:
Consider consulting with credit counselors. A credit counseling professional can provide guidance on budgeting, money management, and debt strategies. They often work with nonprofits and can help you craft a tailored debt management plan. It can be like getting a personal trainer for your finances, which for some people is a good thing, but can also come with some pain to get the gain.
3. Debt Consolidation Loans:
If juggling multiple debts is giving you a headache, think about consolidating them. This involves taking out one loan to pay off all your other debts. The goal is of course one monthly payment, which is ideally at a lower interest rate. However, it’s crucial to read the fine print – like super crucial. There are costs associated with getting your own debt consolidation loan without the help of a debt relief company, and if you go this route, you want to ensure that the long-term costs don’t outweigh the benefits.
4. Bankruptcy: As a Last Resort:
While the word “bankruptcy” might sound daunting, sometimes it’s the most logical option, especially if your debts are simply insurmountable. It can offer a fresh start. However, it’s a long long process of recovery because it comes with long-term consequences for your credit history. It’s essential to consult with a legal professional before considering this route.
The road to understanding debt relief and making the best choices for your financial future can seem intricate… like a puzzle.
However, you’ve made it to the end of this long article. and you are to be congratulated.
Every piece you’ve read and learned today fits into the larger picture, which is you empowering you.
By equipping yourself with knowledge shared, you’re no longer wandering in the maze.
Debt relief, and whether or not a company is legitimate to help you with it, is now something you can more strategically navigate.
Education, your education, is your defense against scams and pitfalls.
And it’s not just about knowing the good – it’s about discerning the bad and the ugly.
By asking the right questions (which we’ve given you above), you put the power back into your hands, ensuring that the company you choose isn’t just legitimate but also the best fit for your unique needs.
The journey to financial health is a series of informed steps.
Today, you’ve armed yourself with some crucial tools:
- how to identify red flags,
- how to ask probing questions,
- how evaluate the myriad of options available.
This isn’t just about avoiding debt or paying off debt or consolidating debt.
It’s about building YOUR foundation for YOUR more secure financial future.
Feeling better prepared?
Remember, if you ever need a second opinion or more guidance, we hope you’ll consider us here at Authorized Debt Relief.
We’ve got the expertise and experience to provide you with excellent support.
Whether you choose us or another company, hopefully with the knowledge you’ve gained today, you’re on a more informed path to financial clarity and well-being,.
Stay educated, stay vigilant, and your path to a more calm and bright financial future is on the way.
You’ve got this!
More than 25,000 in debt?
We can help!