Mediator Law Group, PC

Debt settlement/debt relief companies often claim they can renegotiate settle or in some way change the terms of a person’s debt to a creditor or debt collector. That includes reducing the balance interest rates or fees a person owes.  These services can be expensive.

~ Business Consumer Alliance’s (“BCA”) has seen countless cases where debt settlement companies over promise and under deliver on their services.  Before entering an agreement with any debt settlement company do research on the business. Obtain a reliability report from BCA and verify how long the company has been in operation if they are licensed and able to provide debt settlement services in your state. Check out any complaints reviews and regulatory actions that may have been filed against the company and/or its principals. Companies offering debt settlement services need to be compliant with Federal Trade Commission guidelines.

~ Obtain all terms guarantees fees and details of the offer in writing and review it carefully. Make sure the information includes any cancellation refund and other policies that apply to the offer. Take into consideration that some creditors may refuse to work with debt settlement companies. It is advisable to check with your creditor before signing any agreement for debt settlement services.

~ Debt settlement companies may encourage you to stop paying your credit card bills. Be aware that doing so may cause late fees to incur penalty interest and other charges to accumulate and the creditors will more than likely boost their collection efforts. Also using the services can have a negative impact on your credit score and the ability to obtain credit in the future. As several consumers have found out debt settlement services can leave you deeper in dept than when you started.

~ BCA advises consumers to avoid doing business with any company that promises to settle your debt if the company:

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• ~ Charges fees before it settles your debts
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• ~ Claims there are new government programs to bail out personal credit card debt
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• ~ Guarantees to make your debt go away
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• ~ Advises you to stop communicating with your creditors
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• ~ Promises it can stop all debt collection calls and lawsuits
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• ~ Guarantees that your unsecured debts can be paid off
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~ Before choosing to use any company’s debt settlement services contact your creditors to see if they will work with you to make payments more affordable or work out some alternative repayment plan. Contact a reputable credit counseling organization for assistance and advice on coping with debt.  Resources may also be available through your state Attorney General’s office. You can also seek advice from a bankruptcy attorney.

~ If you have a dispute with a debt settlement company or provider file a complaint with BCA. For more information see BCA’s Resource guide on debt settlement and debt negotiation.