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Finding the Right Debt Relief Companies

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Daniel Cohen
UpdatedOct 22, 2012
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    9 min read
Key Takeaways:
  • Understand what to look for to find a reputable debt relief company.
  • Don't work with any firm that promises you a specific result.
  • Ask as many questions as you need, to understand your options.

Find the Right Debt Relief Company to Resolve Your Debt Problem.

Many Americans seek debt relief each year. The rise in unemployment, huge drop in home values, and increase in the cost of living have combined to place more Americans under financial strain. If you look for debt relief, first, find the right debt relief program and then, second, find the right debt relief company.

The best way to find the right debt relief program is to compare the pros and cons of each debt relief approach. This way, you can find the debt relief program that will help you achieve your financial goals, whether they are getting out of debt as fast as possible, finding the debt relief program with the lowest overall costs, or working to solve your debt problem with the least damage to your credit score. Make sure to consider the negatives that come with any program, so you make an informed decision, and avoid debt relief scams.

Quick tip #1:

You can speak with one of's pre-screened debt relief providers and receive a free debt relief consultation.

FTC Warning About Debt Relief Companies

After you have narrowed down the type of debt relief program that serves you best, you still have to find the right debt relief company to help you. There are many debt relief companies out there, looking for your business. All companies are not created equally. Some debt relief companies are in business to help consumers get out of debt. Unfortunately, some debt relief companies exist to take advantage of consumers who are already struggling. If you are not a wary and skeptical consumer, you leave yourself vulnerable to bad debt relief companies who want to prey on you.

The FTC warns consumers who "...get a sales pitch from a debt relief firm, (to) pay attention to the details. Stay away from any company that:

  • "Promises that unsecured debts can be paid off for pennies on the dollar. The truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet always is to contact your creditor directly and as soon as you are having problems making payments.
  • "Requires substantial monthly service fees and demands payment of a percentage of what they've supposedly saved you. The truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee — a percentage of the money you've supposedly saved.
  • "Tells you to stop making payments to or communicating with your creditors. The truth is that if you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score also will be hurt by not making payments.
  • "Claims that creditors never sue people for not paying their unsecured debts. The truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
  • "Claims that they can remove accurate negative information from your credit report. The truth is that no company or person can remove negative information from your credit report that is accurate and timely. It's illegal."

Trade Associations

When choosing a debt settlement company, look for a firm that is a member of the AFCC (American Fair Credit Council), the industry trade association for reputable settlement firms. Avoid firms that are accredited by USOBA, the United States Organization for Bankruptcy Alternatives, as USOBA accepts firms that they know are not compliant with the FTC rules governing debt settlement. Also, look for a debt relief firm whose individual debt counselors are certified by the IAPDA (International Association of Professional Debt Arbitrators). Counselors with IAPDA certification have passed tests that require them to be knowledgeable about all forms of debt relief.

Online Research

Do your homework! If you know someone who can personally recommend a debt relief company that helped him or her resolve a debt problem, that is a great place to start. You also want to check out a company online. Research the company’s reputation. Check the debt relief company’s rating with the Better Business Bureau, but keep in mind a few important facts when using the BBB as a resource. The letter grade given by the BBB is what most people focus on, but BBB grades can be misleading. It makes sense to look at the letter grade, but to pay greater attention to how long the firm has been in business, the number of employees it has, and the number of complaints against the business compared to the number of clients it serves. If you only pay attention to the number of complaints, you will likely misgrade the biggest, experienced firm that does quality work, which will have a much higher number of complaints than a new firm that has few total clients.

Who Works on Your Case?

Any debt relief company can have a slick Web site and salespeople a polished, professional sales pitch. It is crucial for you to ask debt relief companies if they have their own customer support division and handles all debt negotiation internally, otherwise, you can end up working with a firm that farms out your case to a different firm you never heard of and had no chance to judge.

No Bad News Is Bad News

No debt relief company offers a program containing only sunshine and roses. Any time you choose to work with a third party to help you resolve a debt problem, there will be some negative consequences. For instance, debt settlement will harm your credit and can lead to collection calls from your creditors. Do not trust a firm if a debt consultant tells you that the firm can stop all collection calls or tells you that you cannot be sued by a creditor. Although a firm can send out cease and desist letters to creditors and guide you how to protect yourself from illegal collection efforts, no firm can prevent one of your creditors from contacting you. If a debt consultant tries to enroll you in a settlement program and does not disclose any negative effects, you should run away.


If you are considering a debt settlement program, the cost of the monthly payment is probably an important factor, as is the total cost quoted to get you out of debt. Do not be lured by firms that tell you that they can settle debts for pennies on the dollar. If comparing two debt settlement firms, the one that quotes you the cheapest over all costs may be offering you a false promise. Any firm that acts as if each of your creditors is going to settle for the same percentage of your debt is also over-promising. Different creditors settle at different rates and the rates at which they settle are subject to change.

A reputable debt settlement firm will tell you straight up if you have creditors that are more difficult to work with, who settle at a higher percentage than others. They will also take into account your individual account activity, such as if you have done any balance transfers in the past six months or taken a cash advance on one of your cards in the past three to six months. If you have done either of these, a reputable debt settlement firm will likely require that you make a number of payments on the account before they will accept it. It is the disreputable firms that will come in with the lowest total cost quote, hoping to entice you with the smaller monthly payment.

Make sure to discuss how the debt relief company’s program affects your credit. If a debt settlement consultant tells you that debt settlement does not harm your credit or that any negative effects can be wiped off your report easily, you are being lied to.

Be wary of anything that sounds too good to be true. Debt settlement programs are not cookie-cutter programs. Results vary because circumstances vary. If your debt consultant tells you that your total cost to become debt free is a fixed amount, you are being misled. A debt settlement program is not like a car payment, where you know exactly how many monthly payments and at what amount it takes to pay off the car. A reputable debt settlement firm will emphasize that the total costs quoted are an estimate, based on the mixture of your accounts and the firm’s experience with the creditors.

Non-profit vs. For-profit

Some debt relief companies are non-profit organizations. Non-profit tax status does not mean the firm offers effective services or good value for the dollar. You might think non-profit means the firm works solely in the public interest, like a church or public broadcasting company, but that is not true. "Non-profit" only indicates the tax status of a firm in the eyes of the IRS and state tax authorities. Non-profit debt relief firms charge consumers fees for enrolling in their programs, as well as monthly maintenance fees, which is exactly the same as for-profit firms.

Read the Contract

Before you sign a contract to engage a debt relief company’s services, read the contract thoroughly. If you have questions about the terms of the contract, do not sign anything until you get clear, satisfactory answers. If you do not understand the answer you receive, ask again. Do not work with a debt relief company where the debt consultant does not have the patience to explain things to you, even if you are asking the same question more than once. Never give a firm your credit card number and permission to take a payment from you before you sign a contract.


Make sure that you are properly qualified for any debt relief program you choose. For instance, debt settlement programs can be a great way to get out of debt at the lowest costs and in the shortest time, while avoiding bankruptcy, but they should be restricted to people who have a serious financial hardship. When speaking with your debt consultant, make sure that he or she has a full and accurate picture of your financial situation and what caused it. Avoid working with debt relief companies when the consultant wants to sign you up before knowing the details about your situation. Do your homework, ask the right questions, and you increase the chances that you can resolve your debt problems without surprises.