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How to Choose a Debt Management Company
Choosing a debt management company requires a lot of research. There are
companies that attract you by quoting unusually low repayments and some
others promise easy debt relief if you send them money. How do you know
that you are working with company that is reputable and trustworthy?
What are other qualities you need to consider?
A reputable credit counseling service or debt management service can be separated
from the ones that are only interested in your money from several key
properties they posses. The following are some essential elements to
watch out for when choosing a debt management agency.
10 Key Signs of a Good Debt Management Company
1. A nonprofit company. Nonprofit debt management services have a
legal obligation to provide education and counseling. Several states
require debt management companies to be "nonprofit" before they're
allowed to operate.
2. Offers free debt counseling. As debt management plans or
programs (DMPs) are not
for everyone before offering a debt management plan a debt counselor
should spend time reviewing your financial situation. A good debt
management company
offers debt counseling and relevant free information. Go elsewhere
if the company rushes you into the deal without offering free
consultations.
3. Licensed to operate in your state. Consider working with an agency
that is currently licensed to offer credit counseling, debt management
plans and related services in your state. To protect consumer rights
most state governments require debt management companies to return all
fees paid to their clients if they are not licensed.
4. An accredited agency. To ensure you get high standards and ethical
practices choose to work with an accredited company -- for example
through The American Association of Debt Management Organizations (AADMO).
5. Employs debt management experts. Reputable agencies employ counselors
who are certified and trained in consumer credit and debt management.
During your initial interview you will be able to detect whether they offer
a doable plan that sets you in the right direction. Be sure they are
certified by reputable institutions that are not affiliated with your
creditors.
6. Charges reasonable fees. Some credit counselors charge high upfront
fees, or urge you to make "voluntary" contributions that can cause you
to fall deeper into debt. Check their base interest rates, penalties,
and minimum repayment amounts to see if they offer reasonable monthly
charges. Only work with a debt management company that will help you for
a low fee and don't require a voluntary contribution from
you for any services.
7. Provides good customer service. Probe the level of their customer
services from your free credit counseling meetings with their
representative. What are your impressions of free credit counseling
sessions? Do you feel treated in a courteous and a professional way? A
company providing unsatisfactory credit counseling can hardly qualify
for a debt management plan.
8. Testimonials or list of satisfied clients. Don't trust the
testimonials provided on their websites or brochures. Instead, find
someone you know or trust who can honestly recommend the company.
9. No unresolved complaints. Check with the Better Business Bureau to
see if there have been any unresolved complaints against the
institution, as well as check with their local courthouse to see if they
have been sued.
10. Offers a written agreement or contract. This should include a
description of all services that will be provided to you and the cost of
those services as well as a disclosure that the debt management service
may impact your credit report and credit scores. Make sure you get all
verbal promises in writing and only pay them once they send you the
contract.
Resources to Help You Find a Reputable Company
There are many resources where you can talk to people you know and trust
about their experiences with debt management services. If they have no experience
working with a debt management company ask them to recommend someone who
can help you.
Alternatively, ask the company if they have list of clients who you can
contact and listen to the opinions of their experiences with the
company. Using information from the BBB, online debt relief forums and
consumer protection sites like ripoffreport.com you can also compare
advantages and disadvantages of many different companies and programs.
These are the things that you should consider when selecting a credit
counseling or debt management service. Use the above checklist to discern credibility and to avoid unscrupulous firms who are
only there to make as much money for themselves. You should be able to
weed out bad debt management companies and select
reputable one that
will best serve your interests.
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