There are two main kinds of best debt solution companies out there, ones that provide debt management services and the others which provide debt settlement services.
Selecting a debt management plan can be very relieving as it has the potential to lift the burden of those due payments from your shoulders. But choosing the right plan and the best service provider is still not the easiest task and requires some insight.
Hence, the best options to consider under such circumstances are the ones brought forward by non-profit firms that are offering to provide credit counseling services.
The reason is that they can offer you a clear path towards a life without outstanding debts with the necessary guidance of accredited credit counselors.
A standard counseling session is held for approx. 25 – 30 minutes and is set up with the intention of getting your wheels turning, so that you get an understanding of the budget involved.
Also, you can set up a monthly plan with a credit counseling organization to clear out all debt in about 3 – 5 years.
Types of Debt Solutions Available
Debt management is a service in which the service providers will have you create a savings account that they will handle.
In this account, you will deposit your installments each month.
Then, after getting the total lump sum you owe to the concerned party, the debt management firms will negotiate the interest rates applied on your debt with the concerned party in an attempt to lower the interest rates on your debt.
And in case of success, you get to go back home debt-free, with a fresh start.
Debt settlement is another service which is available out there for getting by debt relief organizations.
It is exactly what it sounds like, a settlement, indeed, an agreement to which the concerned party to whom you owe the debt shall come to agree upon an amount of money that you give to them.
However, it is lower than what you owe them.
In this case, the process of getting a bank account is the same as that of the management case.
Still, the negotiations are done with the intention of lowering the amount of debt you owe to the firm.
Considerations Before Getting Involved in a Plan
Following are the few considerations that you need to know before getting involved in a plan:
- Kind of Debt
Most of the time, the debt management and settlement companies only handle certain different types of debt and don’t exactly stray away from their expertise, for example, credit card debt, medical bills, etc.
And in case of your specific debt being of a certain type, you would have to take a deeper dive into researching the best debt solution companies at your disposal that fulfill your needs.
- Debt Amount:
This is another very significant factor that plays an important part in the selection process of a counseling firm and whether or not you even require a firm of such sort to get affiliated with.
And as the standard practice goes, a minimum debt of at least $10,000 is a requisite for these organizations to get involved.
- Better Business Bureau Rating
This is one trustworthy way of testing out the validity of the firm you are considering.
The Better Business Bureau rating of an organization can speak a lot of truth about that organization.
It is a review service that is run by the number of people satisfied with the results they got from availing of the services provided by the organization.
Thus, if an organization can manage to keep their BBB ratings up, they are doing something right for the rest of the people.
But it is important to review those reviews and make sure that real people wrote those and that it’s not a bot-generated review page. Understand the complaints made on the page and see through them if they make sense to your situation.
- Upfront Payments:
Upfront payments are banned by the Federal Trade Commission from being charged from customers by firms that find themselves conducting businesses over communication devices such as phones or emails etc., since 2010.
Because these firms cannot guarantee the debt settlement or the low-interest rates that they advertise, hence they can’t ask for upfront fees.
- Being Transparent:
As there is a lot of potential for running into a scam, it is highly advised that you opt for an option that is as much transparent about their policies as possible.
As in how long the process will take, and what are all the types of fees included and why, so no hidden fees and so on.
What Is the Standard Rate for Negotiations
As the organization involved in the process is providing you a service, they have the service charges that they ask for.
Some companies tend to depend on those charges on the variable of success in the matter, so they would only ask for negotiation fees if they are effective.
So yes, there are many different types of organizations available out there, with even those who would ask for a monthly fee regardless of success in the matter.
The best debt solution companies tend to offer their services at a rate of around 15 to 25 percent of the total amount of debt you owe your concerned party.
Although, some debt settlement companies do offer these percentages of the total amount of debt they get you settled.
So, if you owed a concerned third party $12,000 and they got your debt settled for $4,000 dollars, then you would owe them 15 to 20% of $8,000 dollars.
This is more commonly known as performance-based fees.
What Are Debt Types Catered for by Most Companies?
Following are the debt types catered for by most companies:
- Credit Card Debt
Credit card debt is very common amongst the masses, as that’s how credit works.
If you start missing out on your payments and end up using more credit than your income, you start getting left behind.
And another reason for this being a common problem is that credit card companies will increase the interest rates on your credit if you miss out on your repayments.
- Personal Loans
This can occur if you can’t pay back the loan payments within the due dates, as they will add late fees in your dues, and that can go downhill from there very easily.
- Medical Bills
This one is said to hurt the most, the traumatic and nerve-wracking experience of being in a hospital can get intensified when the medical bills go sky high and you find yourself in debt for the foreseeable future.
So much so that almost 40% of the population of the U.S can’t pay their medical bills is what a survey found out.
- Unsecured Debt
This type of debt is mainly free from collateral so, except mortgages, and student loans, the above-mentioned debts can be classified as unsecured debts.
The Advantages of a Debt Solution Program
Suppose you end up utilizing the services provided by a debt management company.
In that case, the advantages to avail of them may include being free from the horrible feeling of missing a due date because of a streamlined process brought forward by the service providers.
These payments are also designed specifically to satisfy your monthly income and expenditure needs.
Also, there is no need for getting another loan, as instead of moving your debt from one organization to another, you are saving up your money into a lump sum and then paying the concerned party off with preferably low-interest rates.
On the other hand, if you use a debt settlement company’s service then, you may be able to pay off the concerned party for less than what you owe.
This is done, as usually if the payments stop coming to the loan providers, they don’t provoke you.
Instead, they take the matters into court and file a hefty lawsuit against you.
Thus, negotiations can often work as they can weigh the odds of taking the lesser repayments and thus saving up the lawsuit costs, instead of going all-out gun-blazing for a big loss of tax dollars.
The Disadvantages of a Debt Solution Program
In the case of a debt management program, the disadvantages include the fact that the person’s total amount is not reduced, only the interest applied on top of that amount, so that can be underwhelming at times.
Also, there is a lot of potential for getting scammed when dealing with debt management programs.
And last but not least, you have to pay monthly fees for such a program to continue, and it may not seem like a lot at first, but this process can take up to 36 to 60 months at a time.
Although in the case of using a debt settlement program, the biggest fallout has to be the damage/blow to your credit.
So, your credit score suffers; even though you have been relieved of the debt percentage, you still owe the service providers.
It will show up in your credit report and will affect it greatly.
Hence, under such circumstances, the best option is to consider it a fresh start and focus on not making the same mistakes as the first time. It is generally believed that the damage from debt settlement can last for up to 7 years in your credit report.
Best Debt Solution Companies at Your Disposal
Without further ado, let’s get to the 6 best companies that offer debt management services to the general masses as non-profit organizations.
- National Debt Relief
National Debt Relief is a renowned company, and based on its track record, it takes the number one spot in our ranking.
They have several examples of debt settlements of up to 50% of what you owe.
They provide free consultation throughout the process and guide you through the whole process.
- DMB Financial:
DMB Financial is another one on the list; they provide management and settlement services as well.
They are well known in the circles of large-interest credit card debts as they work with a lot of credit card companies to provide the services they advertise.
When they negotiate your case with your creditors, you have a higher chance of getting the desired results.
CuraDebt makes it next on our list, and for a good reason: they have been providing their services since 2000, and have an extensive influence in the market.
But in addition to all that, they also deal with tax debts, which a lot of companies tend to stray away from, and so they offer special consultancy to people owing taxes.
And their consultancy service is free as well.
- GreenPath Financial Wellness:
GreenPath provides debt management services to those who owe a debt to their concerned creditors but also have a massive interest added up on top of it.
The thing that stands out about GreenPath is that they are completely transparent about their pricing policy and don’t keep it ambiguous.
Also, they provide a lot of financial educational material on their website for you to learn from for your future endeavors.
They also offer in-person consultancy in some states of the U.S.
- Cambridge Credit Counseling:
Cambridge Credit Counselling is another one of the best debt solution companies.
This one provides several services for free, being a non-profit company, such as credit counseling.
Also, upon signing up, you are promised an 8% to 20% reduction in interest rates adding on your debt and a time of being completely debt-free in about 48 months or less.
And last but not least, Apprisen is a company providing their debt solution services for more than 60 years.
Their programs provide in-depth financial counseling for free, finance education, and student loan counseling.
They also provide in-person counseling in 5 states of the U.S and mainly provide their services in all 50 states.
Do You Need a Debt Solution Service?
One thing to remember is that debt management companies don’t provide any type of loans, so they are not like debt consolidation programs.
Instead, a debt management firm pays your debts to your owed money to your creditors themselves, and that’s when they make their negotiations.
So, it is important to understand that, if your debt is not too big, or if it is approachable then you may not require a debt management plan.
The same goes for the debt settlement programs.
The amount of damage to your credit has to be weighed against the amount of money that you must give away each month and make the decision upon that sense from there.
The Final Analysis
This article is aimed at providing you with a deep dive into the different types of debt solutions out there.
If you can’t pay your debt, or you feel like it keeps getting worse, do not worry, there is still hope and you can get help from professionals who provide these services.
And thus, based on the amount of debt you owe, the service you should opt for has also been explained in the above article.
Finally, the companies and organizations that are there to provide you with these services are given special precedence in this article, and we also brought forward to you our top 6 picks for that.
We hope you find the right service and the service providers for your scenario.