Many Americans in debt reach a point where paying their accounts in full seems unrealistic, if not downright impossible. In situations like this, bankruptcy may not be an option on the table — or the consumer may want to avoid filing for bankruptcy unless they’ve exhausted every other option. In cases like these, it’s worth exploring debt settlement to figure out whether this strategy could be beneficial. are credit repair companies legal?
Settling your debts means paying a certain amount you and your creditor have agreed upon — one that is less than the original price tag on your debt but more than the $0 your creditor would receive if you were to default. An example would be paying $6,000 on a debt that was originally $10,000. The outcomes of settlements can vary. One creditor might agree to accept just 30 percent of a total balance; another might decline to negotiate at all.
There are risks involved with this strategy, but it’s still worth exploring for Americans facing major unsecured debts — particularly serious credit card debt. One essential step toward achieving the desired results is choosing a reputable debt settlement program capable of delivering proven results while avoiding scams.
Legitimate Debt Settlement Companies vs. Scams
There are many debt relief firms out there. How can you know which companies are legitimate and which are scams?
Know the signs of a potential debt settlement scam, like:
- Making promises or guarantees about how much debt can be eliminated
- Charging fees right off the bat, before the company has settled any accounts
- Requiring you to provide your personal and financial information before it will provide information about itself
Legitimate companies, on the other hand, will avoid making assurances about the results it can provide from day one. The fact of the matter is there’s no way for anyone, including the company, to predict the exact outcome of the negotiations.
Any lawful debt settlement firm will be careful not to charge even a cent in up-front fees — something that’s illegal under Federal Trade Commission regulations. Rather, it will only collect a fee upon reaching a settlement.
Finally, reputable companies will have no problem providing ample information about its services, the potential outcomes you could experience and the risks you’ll face along the way. Furthermore, it will provide this information with no strings attached. You should not have to give away private information just to learn about how a program works.
Finding a Reputable Debt Relief Program: Is Credit Associates a Scam?
So, how can you go about finding a program that’s on the up-and-up?
Say you come across the company Credit Associates and want to evaluate its legitimacy. One sign there’s no Credit Associates scam is that this company is an “Accredited Member” of the American Fair Credit Council (AFCC). To be an AFCC member, companies have to adhere to a set of principles meant to protect the consumer. This code of conduct requires companies to follow the letter of the law, communicate truthfully and charge only reasonable fees. Credit Associates is also sanctioned by the International Association of Professional Debt Arbitrators (IAPDA), another leading accreditation organization in the industry.
A review by The Balance also failed to turn up any recent legal actions taken against Credit Associates by the government — as often happens when a scam company comes to light. While this speaks to the legitimacy of Credit Associate, the review also points out that much customer feedback calls out spotty communication from this company and lack of transparency about how much its services cost.
Even though Credit Associates does not appear to be a scam, it’s still important to know any company’s strengths and weaknesses before choosing it as a partner.