Some people are hesitant to work on their debts alone because they do not trust the way they handle their money. Until they learn how to properly manage their finances, opting for debt assistance is the logical way to approach debt relief. When things get too complicated, getting professional help is often times the fastest way to solve the problem.
If that is your course of action, debt management should be the best course for you to take. It enlists the help of a debt counselor who will not only help you with your debts, they will also educate you on how you can stay out of debt. On a the plus side, this debt relief program will hardly affect your credit score.
However, there is one important step that you have to take carefully – who among the many debt management companies will you entrust your debt to? Here are some tips that could help you make the selection.
First of all, read the TSR or Telemarketing Sales Rule. This is the law implemented by the FTC (Federal Trade Commission) to assist consumers in identifying the legitimate debt relief companies from the scam.
One of the telltale signs of a illegitimate company is when they ask upfront fees. This is a big no-no in the TSR. No legitimate company will ask this from you. In relation to that, initial consultations are always for free and does not obligate the consumer to avail of the services of the company after.
You should also be wary of companies who promises too much. Remember that they want to earn from you so they will say a lot of things to you. If they insist on a solution even before looking at your finances, there is something wrong here. If the debt counselor promises that your interest rates will go down, you have to question that. While debt management companies will try to negotiate this with clients, it is not a guarantee. So if they are claiming otherwise, you need to be a bit more cautious.
Ask them what they can do for you. If you cannot understand, ask them again. It is very important that it is clear to you what the debt management company can do for your debts. In relation to that, you have to ask them for the costs that is expected of you. Hidden fees are in violation of the transparency clause in the TSR.
Another concern that you should inquire involves your money. In this program, you will send your monthly payments to the counselor and they will distribute it to your different creditors. Get the full details of this procedure and make sure that you remain to be the only owner with full control of the account where your money will be kept. Also, it has to be kept in an FDIC insured account for your safety.
Before you sign any contract, make sure that all the details are understood by both parties. If you are not comfortable with anything, do not sign it.
Trust your gut instinct when it comes to choosing the right company. If something doesn’t feel right, there may be a good reason for it.