Free Debt Settlement Companies

A search for free debt settlement companies on the Internet will yield many results. Unfortunately, debt settlement companies write many of the articles you find, so where do you get unbiased information? On top of that, are free debt settlement companies really free?

Learn How to Eliminate Credit Card Debt!

Debt settlement usually refers to credit card debt only and does not apply to mortgages, loans or other types of credit. There are basically three types of debt settlement:

1. You Have the Cash – In this instance, you already have some cash you can use to settle your credit card debts. Once you sign up with a debt settlement company, they contact your credit card companies on your behalf and negotiate a settlement so the account is paid in full. Your cash is used to settle with one or all of your credit card companies.
2. You Need to Build Up Cash – Here, the debt settlement company will set up a trust and allow you to build up needed cash they can use to settle your credit card debts. The debt settlement companies will not attempt to settle your debts until you have enough cash built up in your trust account to cover your credit card debt.
3. Do-It-Yourself – This is where you contact your credit card companies on your own and speak to them directly about the best way to get your debt paid off. In some cases, credit card companies will reduce interest rates to help you achieve your goal. Some will even offer a discount on the entire amount you owe if you pay a lump sum amount by a set due date.

Experts in the financial world say there are no such companies that will settle your credit card debt for free. On the other hand, there are places like the National Foundation for Credit Counseling where you can find free debt counselors who can help you get control of your credit card debt on your own at no cost. Firms like the National Foundation of Credit Counseling are non-profit firms.

This is a personal choice and there are many to choose from. Because none of them are truly free and either charge you a fee or take a fee from your trust account when settling your credit card debt, here are some tips to find the best debt settlement company:

• Contact the BBB – Call the Better Business Bureau in your area and find out if the company has any complaints. Steer clear of companies that either have numerous complaints or unresolved complaints.
• Partnership Organizations – Check to see if the company belongs to any organizations such as the United States Organization for Bankruptcy Alternative. (USOBA) or The Association of Settlement Companies (TASC). Both of these organizations evaluate debt settlement companies and their performance. In addition, check with your local Chamber of Commerce to see if the company is a member.
• The Fees – Do some shopping and find out what fees are charged whether you do the bulk cash method or the build-up trust method. Fees can vary from company to company.
• Guarantees – Does the company offer any guarantee? Only choose ones that do.
• Certifications – Does the company employ certified debt settlement negotiators? The International Association of Professional Debt Arbitors offers certification programs for debt settlement negotiators.

There are some good reasons to use a debt settlement company and some aspects to watch for:

• Credit Score – If you utilize the build-up cash method, keep in mind the debt settlement company won’t make any payments on your behalf to your credit card companies until you have built up enough cash. This means the credit card company will continue to report negative informaiton to your credit report, which can lower your credit score.
• Correspondence – Make sure you receive a copy of all the correspondence the debt settlement company sends to your creditors on your behalf. Ask for details and documentation on emails and telephone calls as well.
• Going It Alone – Often consumers who are behind in credit card payments fear contacting their creditors. Credit card companies understand that people do get behind, so try going it alone before you hire a debt settlement company. Remember to keep your cool and be polite. See what the creditor can offer you. Don’t be afraid to negotiate with them and think about their offer before you take it.

There really is no such thing as free debt settlement companies but there are companies that you can hire to help you settle your credit card debt. Before you consider paying fees, see about negotiating on your own.

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