There are important questions consumers need to ask before choosing a debt settlement company.
Towson, MD (Vocus) May 8, 2010
Consumers overwhelmed with unpaid bills are desperately looking for a way out. There are lots of advertisements that say for a fee, a professional debt-settlement company will help rid you of your debt for as little as half the amount you owe.
Debt settlement is a perfectly legal solution for consumers who are in deep. But consumers need to ask the right questions to choose a company that will really work for them. Persels & Associates has put together a list of questions consumers need to ask before signing with a debt settlement company.
Consumers need to ask their debt settlement company about the company history. For example -- how long has your settlement company been providing financial assistance to your customers? How many settlements have you successfully negotiated for your customers? Most settlement companies are new and are only focused on acquiring new customers and not on negotiating settlements. At Persels & Associates we have been supporting people struggling with debt since 1997. Our attorneys carefully review each and every client's file to verify the client's status, as opposed to other firms who may only review a client's file if they are having problems.
Payment and Fees
How much of my monthly contribution is allocated toward funding settlements and how much is allocated toward fees? Many settlement providers collect all of their fees upfront, regardless of a customer's success on their plan. With upfront fees, a customer's payment is almost entirely allocated to the settlement provider for the first 12 - 18 months on the plan. P&A uses a contingency fee pricing model. This means that we wait to collect the majority of our fees until AFTER a settlement is successfully negotiated. This allows the client to build up funds in their escrow account more quickly, which leads to quicker settlements.
Understanding the Debt Settlement Process
Can the company explain their debt settlement process to you? Most firms do not begin negotiations until enough balance has built up in your account, which can often take months. This initial length of time, often referred to as the "quiet period", actually increases the risk of creditors taking legal action. Because Persels & Associates does not collect the majority of our fees until after a settlement has been negotiated, our clients are able to build up their escrow account balances quickly. This allows us to begin negotiating with creditors immediately. We use a customized and intelligent settlement platform that alerts us as to the best time and dollar amount to settle for.
Length of Time and Monthly Payment Amounts
Will your settlement company work with you to review my full budget and to create an individualized payment plan that works for me? Most companies do not offer flexible options when selecting the monthly payment amount and the length of time on the plan. Instead, they focus on a monthly payment that matches pre-set plan lengths. P&A offers settlements that suit individual client situations, with standard terms for Debt Representation of 36, 48, or 60 months long. We also offer a customized term for clients who require a more personalized payment option. Our goal is to find the right term for each client, so that they can achieve success in their debt representation.
Understanding Payment Processing Fees.
Does your settlement company charge additional 3rd party processing fees in order to access the funds in my account? Most companies require that customers open an account with a 3rd party vendor and pay additional money in processing fees. These additional processing fees range from $10-$15 per month plus up to $20 additional for each creditor disbursement. P&A does not charge additional fees for processing. Our system automatically debits a client's money and keeps it in a safe IOLTA (Interest on Lawyers Trust Account) until a settlement is negotiated.
What type of legal support does your settlement company provide in the event that you get sued? Many companies do not offer any legal support to customers if they run into legal challenges. Those that do provide legal assistance typically allow you to talk to a centralized attorney or paralegal that is not licensed in the customer's state. This greatly reduces any real help or the attorney would be risking the unlawful practice of law.
Customer Support and Interaction
In what ways does your settlement company engage with its customers? All companies offer some form of telephone servicing, mostly m-f. Interaction online tends to be "one-way", where customers can review limited content and articles as to how settlement works, and access financial calculators to help with budget calculations. Very few offer online servicing or account review. Because P&A offers full online and offline capabilities, our clients can choose how they want to receive their communications. Clients are able to take advantage of 24/7 online account information, education, and servicing. The "My Persels" portal allows our clients to view and track their own settlement progress as often as they like, making them an active participant in their success.
The stress from deepening debt is overwhelming for millions of Americans. Don't let a debt settlement company add to problems. Use the questions we provide as a way to find a company that will work for you.
About Persels & Associates
Persels & Associates, LLC, and its entities are pioneers in the field of offering "unbundled" legal services to individuals who cannot afford traditional legal services. As Americans credit debt rose, Persels & Associates bridged the "gap" between consumers and their debtors. Today, Persels & Associates employs 25 central office staff attorneys and over 150 additional attorneys in the 50 states while representing over 40,000 clients nationwide. For more information, please visit http://www.perselsandassociates.com.
Karen McGagh, KMC
# # #