- 1). When choosing a debt relief program there are some key criteria to focus on. Make sure the program is accredited, as anyone can advertise as debt relief counselors. Know what kind of debt the program covers and what restrictions are in place as to who can access their services. Ask how they communicate with the creditor; is it by phone, email or mail? And ask how you will be notified that the creditor has accepted a lower payment, and the time they expect it will take before the negotiated lower debt begins.
- 2). Inquire about fees. A company may advertize themselves as free, but charge for services such as calls, mail, handling fees, etc. One of the ways you can get trapped is through the free trial offer. Be careful about accepting trials as typically the free period is only 10-30 days and not long enough for your debt relief to be negotiated. After the initial free period, fees are typically in the $50- to $60-a-month range. You'll get charged the moment you pass your initial trial.
- 3). Typically, you will have two options depending on what kind of program you sign up with, consolidation or a negotiated monthly rate to creditors. With consolidation you have all your debt lumped into one low monthly fee. The debt manager contacts all the creditors, negotiates a reduced total for each, and then gives you a low-interest loan to pay off all your debts. Consolidation is what appeals to many, but when you add a new payee to your circle you want to make sure that your old debt has been satisfied and you are really paying down the debt owed and not creating a deeper hole.
The second option is that you contact each creditor to reduce your debt total, interest, points and fees. You continue to pay, but at a lower rate. - 4). Get it in writing. Any promises made to you regarding reduced credit card payments and reduced totals owed need to be in print. Make sure that you receive not only a printed agreement from your debt relief manager, but also that you go directly to your credit card company and confirm the negotiated amounts and payment plans and receive the confirmation in writing. Also, request your debt relief manager to send you a monthly statement. Sadly, many relief companies do not send monthly statements, which can create great confusion.
- 5). Know the impact. Debt managers may tell you there is little to no impact on your credit rating for making a deal, but that is not always the truth. Call your creditors and ask directly. If negative points have been placed against you, ask that they be removed. Some creditors will remove points, but only after they have received a negotiated amount.
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