When you decide that debt settlement is right for you, how do you choose out of the many companies offering this service? There are many new companies opening up in the last few years offering these services, some very good and some bad. What should you know about finding a company that will provide excellent personal service and abide by ethical and honest business practices? Here are a few questions to ask.
Do they make the proper disclosures about a Debt Settlement program?
• Do you fully understand the fees and payment structure that was presented to?
• Do you understand that Lifeboat Financial is not a law firm and that Lifeboat Financial, nor any of its officers, employees or agents can provide legal advice?
• Do you understand that Lifeboat Financial does not manage your personal savings account that will be used for settlement purposes nor do we make payments to creditors on your behalf?
• Do you understand that a settlement program may have an adverse affect on your Credit Report?
• Do you understand that Lifeboat Financial cannot stop a creditor from charging interest on your account?
• Do you understand that under certain circumstances, money saved during the debt settlement process could be considered taxable?
Are they Insured?
There are some unscrupulous companies out there that could take your money and run; you want to be protected from this. An insured company will protect you from a company's unscrupulous employees.
• Lifeboat Financial covers you in case of dishonesty, fraud, theft, and other misconduct.
How Long Is Their Program and what settlement percentages are they claiming?
You should ask the questions: "Does it matter how long it takes me to get through the program?" and "Will there be any potential problems if the program goes on for a too long of a time?" You need to be aware that in almost all states, doing a program longer than 36 months can dramatically increase your risk of being sued by your creditor. Spreading the program over, 48 or even 60 months can potentially create legal problems, increase program costs, and increase the risk. We don’t want you to resort to filing for bankruptcy. Some companies do not care and push you to get started so they can collect their monthly fees. Although some companies seem to charge you lower monthly fees, they compensate for this by stretching out the length of the program, so that over time, you pay the same amount or more than you would have in a shorter term program. If a debt settlement company is offering programs to settle your debts for less than 40 - 60 percent of your outstanding debt then BEWARE! Settlements less than 40% are possible but your program shouldn’t be based on a lower rate. Based on data from the debt settlement industry most clients that completed their settlement programs end up averaging between 40 and 60 percent overall for all their settlements.
• At Lifeboat Financial, we usually recommend that you do not go with a program over 36 months no matter how appealing it is or how much easier it seems. Having an additional $100 in your pocket every month will cost you considerably more in costs and potential hassle in the long run.
Do They List an Address on Their Web Site and is the Debt Consultant and Negotiator with the Same Company?
Does the company that negotiates the debt employ the debt consultant? There are many organizations that sign people up and then sell their clients to a negotiation company. We have one of the top negotiation teams in the country and Lifeboat Financial handles everything in-house. Also it is important that you check to see if the company has an office with a physical address (if a PO box or no address at all, keep looking!)
• Lifeboat Financial’s corporate headquarters is located in at1300 E Hillsboro Blvd Suite 202
Deerfield Beach, FL 33441. It is from this Office we are able to service our clients nationwide.
Is it a Flat Rate or a Performance base fee plan?
All companies charge a fee; this should be expected but you should definitely be aware of the amount of up front fees a company wants. Performance based fees are usually more costly and uncertain. Performance based plans may charge between 20 - 30% of the debt. With a Flat Rate fee structure that Lifeboat Financial offers you know what you are going to pay that way the client is typically more committed to finishing a program because they have made an investment in getting results.
• At Lifeboat Financial our negotiators are paid bonuses for better settlement percentages, which means they are encouraged to make a better settlement for you. This lets you know the settlement team is working for YOU and not the creditor.
Who Looks After Your Savings?
Some companies hold your savings in a trust account requiring you to hand over control of your money. The safer practice is to establish a special purpose account through a 3rd party provider such as Global Client Solutions. This type of account is owned and controlled by you and helps you maintain the discipline to meet your savings goals while offering protection from creditors. Self saving programs where the individual sets aside savings in his or her own bank account also work, but they require greater personal self discipline and have lower percentages of completion.
• At Lifeboat Financial, a special purpose account is set up for your savings, you retain control of this special purpose account and only you can approve payments out of the account. You will also authorize every one of your settlements before it is finalized. Nothing is done without your approval.
Do They Accept Credit Card Payments?
Does the company accept credit card payments for their fees? If they do this, it is both unethical and illegal. Why would a creditor negotiate on a debt that has just been put on there by the company that's negotiating the debt?
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