Questions to Ask When Hiring a Business Debt Settlement Company[yoast-breadcrumb]
Key Questions to Ask When Researching Business Debt Settlement Firms
If your business is drowning in debt, you may be looking into hiring a debt settlement company. These companies work on your behalf to negotiate reduced payoffs with creditors. Settling debt for less than you owe can help you avoid bankruptcy and resolve debts faster.
However, debt settlement companies vary widely in competence and ethics. It’s critical to thoroughly research any firm before signing a contract. Here are crucial questions to ask potential providers:
Upfront Fees: What Will I Owe Regardless of Results?
Most debt settlement firms charge ongoing fees based on enrolled debt amount and/or a percentage of any settlement savings. However, the FTC Telemarketing Sales Rule prohibits charging fees before settlements are successfully negotiated.
Avoid companies asking for large, non-refundable upfront payments. Legitimate providers explain all fee structures upfront and tie charges directly to settlements achieved.
Past Performance: What is Your Track Record of Success?
Ask prospective firms their historical debt settlement rates, including the typical percentage reduction. A trustworthy company will be transparent with performance metrics.
Per the CFPB, reputable settlement companies often settle around 50% of enrolled debt. Ensure any claims match industry benchmarks.
Creditor Relationships: Which of My Lenders Have You Worked With?
Experienced settlement firms cultivate relationships with major creditors and understand their policies. Ask for specifics on which of your lenders the company has successfully negotiated with previously.
Lack of experience with your creditors may impede obtaining favorable settlements.
Licensing: Are You Properly Approved for My State?
Debt settlement is regulated statewide. Verify any firm is licensed in your state, indicating legal compliance.
Company History: How Long Have You Been in Business?
An established company with years of experience is ideal. Be cautious of new companies lacking a proven track record.
Research online reviews and BBB complaints. Many issues may signify shady practices.
Settlement Process: Please Explain Your Strategies
Ask how the firm will negotiate settlements on your behalf. Will they start with smallest debts first? What is the typical timeframe per account? How often will they update you?
Ensure you understand and are comfortable with their process and communication style.
Credit Score Impacts: How Could This Affect My Credit?
Debt settlement may hurt your credit initially when payments to creditors cease. However, reputable firms work to remove negative marks once debts are settled.
Understand potential damage, but reputable companies aim to minimize long-term credit harm.
Guarantees: Do You Promise Specific Results?
Be wary of ironclad guarantees. Settlement outcomes depend on many factors, including your finances and creditor policies.
However, a trustworthy provider outlines expected results based on experience. They also clearly explain refund policies.
References: Can You Provide Client References?
Ask for 2-3 references from recent clients with similar situations to yours. Contact them to ask about their experiences.
Positive feedback indicates the company likely delivers good results and service.
Ongoing Support: Will You Manage My Accounts Until Completion?
Settlement can take 2-3 years. Ensure the firm provides continuous customer service and status updates throughout.
You should never feel left guessing on your accounts. Seek a true partner.
Vetting debt settlement firms takes diligence, but asking the right questions helps identify reputable providers who can negotiate effectively on your behalf. Get clear answers before signing any contract.
With the right partner, settlement can legally reduce debts and get your business financially on track again.