Questions You Should Ask Before Signing Up for a Debt Relief Plan

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Questions You Should Ask Before Signing Up for a Debt Relief Plan

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A Debt Relief Plan is not for everyone and there are several things to consider before enrolling in one. 

The marketplace has many options for Debt Relief Providers and often consumers struggle to make sure they are comparing apples to apples.

With options such as; Credit Counseling, Debt Management, Debt Settlement, and Bankruptcy it is difficult to ensure that the same type of plan is being compared from one provider to the next.

Here are a few questions that consumers should ask before entering any agreement with a Debt Relief Provider to ensure they select a provider that is best for them.

1. How many different plans do you offer? To ensure you are offered the solution that is best for your situation, make sure the company you are reviewing offers a full suite of Debt Relief options. Look for a company that can offer a range of options to ensure that your situation is matched to the best plan, not the other way around. There are three options available; Debt Management, Debt Settlement and Bankruptcy. Bankruptcy is a legal option that requires the advice of an attorney and is a last resort to overcome an extreme financial situation; the impact to your credit can last much longer compared to the other options. For some people this is the best choice so it is important that it is taken into consideration and the provider can refer you to an attorney for Bankruptcy services if it is the best option for you. Most providers also offer credit counseling, the practice of offering counseling from a certified credit counselor that is tailored to your financial situation. Credit counseling should be available for free, regardless of whether you sign up for a debt relief plan.

2.  What is your rating and track record with the Better Business Bureau? This is important as the BBB acts as an advocate for consumers to resolve disputes, facilitate communication, and provide information on ethical business practices. If the company has a poor rating or you see unresolved complaints, look for another provider. CareOne works very hard to maintain our A+ BBB rating which was earned after years of service in the debt relief industry. Make sure the company you select doesn't give customers the cold shoulder when an issue arises with their account. To check a company's BBB rating, click here.

3. Are your credit counselors certified? If someone is providing you advice and counseling on how best to manage your debt, make sure you are speaking with a certified financial counselor. Certified counselors helps ensure that the person you are speaking to is up to date on the latest standards and is held accountable for their practices and actions.

4. Are you licensed to do business in my state? To check if the company is licensed and authorized to provide services in your state do a search for "licensed debt management companies" and "your state" and "licensed debt settlement companies" and "your state". Within the results you are looking for a state website with the domain ".us" or ".gov".

5. Is your agency certified to ISO standards? ISO is a series of standards used internationally to develop a quality management system that establishes the processes needed to ensure customer satisfaction and continuous improvement.Companies that adhere to these standards are more likely to provide consistent high quality service.

6. Do you receive "fair share" payments from creditors? Many Debt Management companies accept a payment from creditors called "fair share". Check with the company you are investigating to make sure that they are truly your advocate and can be objective when dealing with your creditors. This payment is most commonly accepted by non-profit providers. If the company accepts a "fair share" payment the FTC requires that it be disclosed that a dual-relationship exists with the creditor and the consumer. This is typically disclosed in the client agreement. CareOne has taken a stand to not accept "fair share" payments from creditors because we believe that accepting payments from a creditor compromises our ability to act solely as an advocate for our customers.

7. Will I receive all contracts and disclosures in writing? A documented paper trail is essential with any financial transaction. In the case of Debt Relief you want to receive a good faith estimate of costs and cancellation policy associated with the plan.

8. How will enrolling in your company's plan affect my credit? What you are looking for here is an honest answer. Ask the counselor how the debt relief plan you are considering will affect your credit. If they tell you they can remove negative marks on your credit report, it is a huge red flag. Legally, negative marks on your credit history can only be removed after a seven year period is over. There are pros and cons to both Debt Management and Debt Settlement. It will depend on your situation as to which is the best for you; based on your previous payment history, amount owed, household income levels, household expenses and the potential impact to your financial profile.

9. How will my payments be made to my creditors? Depending on the option that is best for you there is a big difference in whether or not your creditors receive monthly payments. Make sure you understand the difference between how payments are handled in a Debt Management plan versus Debt Settlement.

10. Can you provide me with real customer experiences? These can be invaluable in making your decision; reading the pros and cons of others experiences can help you see if this is the right choice for you. Look for an online community where you can post a question and hear directly from customers on what they have experienced. Also, beware of an online community with only positive posts and no negative posts. This suggests the company is filtering information by deleting anything negative. This raises questions that they may have something to hide.

11. What other tools and resources do you offer to keep me on track and help me maintain success once I've finished my plan? Enrolling in a Debt Relief Plan is one of the first steps to changing credit habits, but it is critical to have access to tools and resources that will help you to make lifetime changes in order to prevent falling back into the same habits. Utilizing resources like an online community where you can speak openly about debt, motivational blog posts, monthly newsletters, and on-going tools and tips increase your chances of long-term success.

Entering into a Debt Relief Plan is a commitment and like any major financial decision it requires thorough consideration.  Consumers should make sure they know what they are signing up for and that the company they are trusting to help them get out of debt has a good reputation and is committed to protecting their rights while providing the tools needed for success.

Did I miss anything? What tips would you provide someone who is in debt and researching Debt Relief Providers? Please share your ideas in the comments section!

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  • I just signed up for a DMP after speaking with a debt counselor. After reading some of these blogs, I just want to verify a couple things and at this point not sure exactly if this is the right spot to do so, but will try.

    We were making are payments on time and have not fallen behind at this point. We checked into this because we did not qualify for a home loan due to income to debt ratio. This plan seemed a good way to get these balances cleared up a bit faster but in doing so I did not want to be negatively effected to badly. I understood signing up that the credit score would be effected due to closing of my credit accounts but from what I have read so far this could be effected even more so than that.

    I also noticed that the notices have yet to be accepted by the creditors and the next plan payments will be lower than minimum. If they do not accept and that lower payment is all that is made would that not even hurt me more so.

    We would still like to be able to buy a home within the next year and I am hoping that this program will not make this an impossible desire.

    Any feedback would be greatly appreciated.

    Thank You,

    John

  • Hi John,

    Thank you for your question regarding your credit. These questions are asked very often and we like to provide the best information we can. Enrolling in a credit counseling plan can have a negative effect on your credit and limit your ability to acquire new credit while you are enrolled. While nothing can be done to fix a poor credit history, by focusing on making timely payments on your existing debt, your financial situation will improve. If you are looking for more information regarding your credit profile you can visit any of the following credit bureau sites.

    www.experian.com    www.equifax.com    www.transunion.com

    Best of luck with your plan!

    Suzanne

  • Oftentimes when a family is faced with medical debt the added expense pushes them over the edge financially. Many of us are over-leveraged financially and not in a position to fall back on emergency savings or even credit cards to pay the bills incurred

  • We hear "experts" clamor daily about the importance of communication. Communication with your children, employer, and spouse are all very important for various reasons. I had always viewed myself as a great communicator. I tell my family I love them every

  • I've changed my mind and going a different way.Sorry for wasting your time,Thank you for information.

  • We are taking Dave Ramsey's Financial Peace University course.  I believe the answer is in process thru completing this course.  We don't want to file bankruptcy again, although our income is nothing compared to what it was six years ago.  My hustand is disable and I am unemployed.  We have lost our home, vehicles and I do not have health insurance.  We got to come out from under this mess that we have gotten ourselves into.  So, I believe that once begain to budget and follow Dave's plan, the Lord is going to bless us to be debt free.

  • Debt Settlement is a debt relief option for those who can no longer keep up with their payments and want to avoid bankruptcy.

  • hi, i need help with my past due accounts and late payments. I got a call from someone who wa telling me "you will go to jail, things you own will be taken, if you are working-you will lose your job and so forth. I tried to get his name, telephone number and last, I said send it to me in writing so I can get someone to help me. He refused.

  • explain briefly the ins & outs of debt settlement only- the how to exactly?

  • Does the program consider payday loans as debt?

  • @denise, There has been a recent policy change and PayDay Loans are now considered. Please contact Customer Care at 1-800-CARE123 and a representative will be able to verify if your particular loan is eligible.

  • @gre, For customers who are unable to afford the Debt Management Plan we offer an alternative, Debt Settlement which requires 2 accounts with a total of $7500. Under this plan you have agreed that you are no longer able to afford paying your creditors, either on your own, or through a CareOne DMP. Instead your monthly payment is deposited into an escrow account. As that account builds value, an experienced team of negotiators contacts your creditors in an attempt to work out more favorable repayment terms, which can either be a single lump sum payment or multiple monthly payments. The monthly payment is based specifically on your budget, and acceptance of a settlement offer can vary on the amount of your monthly payment, the rate at which your escrow fund builds value, and the creditors. Your creditors will not receive a monthly payment.

    Debt settlement works and it does take time and patience. We have several resources to help you be successful on the plan:

    We have several guides to help you as well please see

    delta.careonecredit.com/.../comparing-debt-relief-plans

    Thanks

    Coach Tammy

  • Do  you offer help with credit card loan  with low credit scores?

  • Well according to me the planning of debt should be given from childhood so that children’s should know how to manage and face it. The main reason for people being drowning into debt is lack of awareness and management skills. Managing finance is an art and not everyone is been specialized in it, but there are options for people who are in debt and can consult expert in getting help from debt.

  • What fees are required for this program? How much is this program to start?

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