Even though debt settlement companies have helped thousands of Americans get out of debt, trustworthy debt settlement companies often feel few and far between. In truth, the industry sometimes gets a bad rap. While my own company, Debt Logic, operates under very strict principles of clear and honest transactions, sadly not every debt settlement company does and a few bad apples can spoil the reputation of the bunch. As a consumer, one way to protect yourself from a damaging business relationship is to spot the red flags of a shady company.
Three Warnings Signs They Might Not be a Trustworthy Debt Settlement Company
1. Are You Paying More Than You Originally Owed?
Debt settlement companies are required by law to clearly provide a written disclosure of the fees and monies you’ll be paying them. This amount should never exceed the amount of debt you’re currently in before settlement. If the contract seems overly complicated, or mentions unspecified sums or fees, it might be a sign that the company is trying to pull the wool over your eyes.
2. Is the Debt Settlement Company Going Rogue?
Many settlement companies today operate independently and without a system of checks and balances. One of the best ways to make sure the company is above board is to see if they are a member of TASC (The Association of Settlement Companies), a nonprofit organization that was created to promote good practiced in the debt settlement industry. TASC works with both debt settlement professionals and legislators to create standards and regulations for the industry that protect consumers and companies alike. New members are subjected to an accreditation review by a an independent third party company that conducts an on-site audit of the Member’s policies and procedures to certify that member’s adherence to TASC standards.
3. Who’s Got the Bank Card?
The money for negotiation and settlement should always be controlled by the consumer, or at the minimum, a third party bank account. This ensures stability of funds that are being used to settle a debt and lowers the chance there will be any miscommunications over who and where the money is going. If a debt settlement company offers to “hold” the money for you in their own account while they prepare to negotiate, this is a red flag moment.
For more information about what to look for in a trustworthy debt settlement company, visit TASC’s website which has some useful information.
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The Joshua Just Blog is written by Joshua Just, CEO and Founder of Diversified Investments. An experienced leader in the market place, Joshua Just has founded several successful firms in the areas of real estate, aviation, litigation & financial management.