Red Flags for Debt Negotiation Resources


April 14, 2017

The process of debt negotiation is a complicated process to navigate for anyone. That’s why a lot of people prefer to hire a settlement company to mediate between them and their creditors. If you’re unfamiliar with this debt negotiation process, as many are, this is when you are able to settle with you creditor at a lower amount that what’s due. However, instead of paying the creditor, your payments will go to the arbitrating company. Ask a bankruptcy lawyer in Pinellas for advice before you seek one of these options.

Bankruptcy Lawyer in Pinellas Warns Against Debt Negotiation Resources

Since debt negotiation can be tricky, you need to know whether the settlement company helping is credible or not. We typically recommend that you hire an attorney to handle debt negotiation, and there are many reasons why. Here are some of the red flags you should be wary of.

When Your Research and Their Stories Don’t Add Up

If you’ve done your research on how debt settlement works and on the background of the arbitration company you’re working with, you’re less likely to get scammed by frauds. Most companies who have been in the industry for years and come highly recommended often have good records and should be your first choice. Those that your friends or family have never heard of and don’t show up online should keep you more vigilant. Be wary of how they handle your account, and check in with groups that accredit settlement companies to assess their credibility.

When They Ask for a Large Amount Upfront

Arbitrators should not be asking for a large sum, relative to how much you have to pay total, right when you start paying. Typically, the payments are customized, so it’s not difficult for you to meet the amount. If it’s too steep something else is up.

If the large amount is coupled with warnings that you should not contact the creditor yourself, then that’s definitely a red flag. As the debtor, you have the right to check in with your credit agency and monitor your delinquency.

When the Contract Does Not Make Sense

Documents are your only tangible proof of what you and your settlement company agreed upon, so make sure you’re amenable to what’s written there. Double check everything, from the duration of the payoff to the commission the settlement company is getting.

When They Make Grand Promises

If they make absolute guarantees that don’t make sense, it’s most likely a scam. See, they have to be able to answer difficult questions honestly, so you know what might happen. For example, they cannot guarantee that they can fix your credit rating because defaulting on payments takes years to fix even if you’ve fully paid the debt. They also cannot promise that the credit agency will not sue during the settlement. These promises of grandeur are often made to get your initial payments, then disappear.

Have you had experience with a fraudulent debt negotiation company? Tell us about your experience in the comments below!

Source: https://www.credit.com/debt/14-questions-to-ask-a-debt-settlement-company/

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About the Author

Michael works in practice areas of Personal bankruptcy – Chapter 7 and Chapter 13, FDCPA, FCCPA, TCPA, Improper credit reporting under the Fair Credit Reporting Act (FCRA), Collection Litigation Defense, and Foreclosure Defense.