Tips for Choosing a Debt Management Company

Finding a really good 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 debt management service can be separated from the ones that are only interested in your money from a few key qualities. No affiliation with creditors is one of them. You can avoid any conflict of interest by working with a debt counselor that doesn’t have any affiliation with one of your creditors.

10 Qualities of a Reputable Debt Management Company

The following is a checklist of qualities to watch out for when choosing a debt counseling service.

1. A non-profit company. Nonprofit debt management companies have a legal obligation to give education and counseling. Several states need debt management companies to be “nonprofit” before they’re allowed to work. Make sure they can prove that they are truly nonprofit entities.

2. An accredited agency. To make sure 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).

3. Licensed to operate in your state. Consider working with an agency that is now licensed to offer credit counseling, debt management plans and related services in your state. To protect your rights most state governments need companies to return all fees paid to their clients if they are not licensed.

4. Offers free consultations. Before offering a debt management plan (DMP) a debt counselor should spend time reviewing your financial situation. They should offer relevant information for free. Go elsewhere if they rush you into the deal without offering free consultations.

5. Employs debt management experts. To succeed in your debt management program, you have to be with a licensed pro who are certified and trained in consumer credit debt management. After a first interview you will be able to learn whether they offer a doable plan that sets you in the right direction.

6. Charges reasonable fees. Some firms charge high upfront fees, or urge you to make “voluntary” contributions. To see if they offer reasonable monthly charges check their base interest rates, penalties, and minimum repayment amounts. Only work with an agency that will help you for a low fee and don’t need a voluntary contribution from you for any services.

7. Provides great customer service. Learn how well they serve you via the first meeting with their representative. What are your impressions of the free consultations? 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. Has good track records or a list of satisfied clients. Try to do a simple research on your candidates. Have they been around for a while with positive stories? How many clients have they helped? Are the clients satisfied with the service they got? Are there testimonials from satisfied clients? Can you find someone you know 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 descriptions of all services that you will get and the cost of those services as well as a disclosure that the debt management company 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.

Those are the things to consider when choosing a debt management company. 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 choose one that will best serve your interests.

Tips for Choosing a Debt Management Company was last modified: April 8th, 2014 by Paul Sarwana