Individuals in debt who wish to make use of the services of a debt management firm ought to do research prior to committing themselves. An unscrupulous debt management firm may damage a debtor's interests in numerous ways, so make sure to keep the following 4 things in mind before hiring a debt management firm:
1. Avoid any agency that calls you by phone or sends you spam: Most debt management firms advertise in the yellow pages or on the Web, but don't over-aggressively get customers. Therefore, there's a good chance any company that does so isn't on the level. Debt management companies that follow a cold calling policy or send unwanted emails will usually not be able to provide any solid references. Most of these businesses don't even keep a reserve fund, that works as a promise for the debtor that his creditors will be paid.
2. Non-profit agencies do not always provide better service: First, not all non-profit debt management firms provide their services free; some firms charge up to 15% of the debt amount. Being a non-profit organization does not make a debt management firm a better and more efficient service provider than those that charge for the services. Actually, companies charging for their service are under an obligation to free their clients of debt as efficiently as possible simply because they're making revenue from their work and their profitability is directly linked to their credibility and reputation in the market.
3. By no means part with credit card information on the phone: A reputed and honest debt management company will never ask you to offer your credit card number or bank information on the phone. This is because they understand that callers may be impersonated; moreover, the increase in online frauds is reason enough for individuals in debt to be extra careful when checking out debt management firms. Debt management companies that are acting in good faith will never ask a prospective client or even an existing client to part with sensitive information of any type over the phone.
4. Do not believe anyone who provides a deal that's too good to be true - it probably is: Frequently debtors come across debt management deals that promise to decrease their debt by half in short time. This rarely happens; however, the debtor does wind up paying high fees and a considerable upfront amount to the debt management company. Such companies also dissuade debtors from communicating with their lenders; this is never a good idea and invariably leads to a negative impact on the debtor's credit rating. If a debt reduction company promises to offer more than some interest reduction and counseling on getting out of debt and staying debt free, the claim ought to ideally not be taken at face value.
1. Avoid any agency that calls you by phone or sends you spam: Most debt management firms advertise in the yellow pages or on the Web, but don't over-aggressively get customers. Therefore, there's a good chance any company that does so isn't on the level. Debt management companies that follow a cold calling policy or send unwanted emails will usually not be able to provide any solid references. Most of these businesses don't even keep a reserve fund, that works as a promise for the debtor that his creditors will be paid.
2. Non-profit agencies do not always provide better service: First, not all non-profit debt management firms provide their services free; some firms charge up to 15% of the debt amount. Being a non-profit organization does not make a debt management firm a better and more efficient service provider than those that charge for the services. Actually, companies charging for their service are under an obligation to free their clients of debt as efficiently as possible simply because they're making revenue from their work and their profitability is directly linked to their credibility and reputation in the market.
3. By no means part with credit card information on the phone: A reputed and honest debt management company will never ask you to offer your credit card number or bank information on the phone. This is because they understand that callers may be impersonated; moreover, the increase in online frauds is reason enough for individuals in debt to be extra careful when checking out debt management firms. Debt management companies that are acting in good faith will never ask a prospective client or even an existing client to part with sensitive information of any type over the phone.
4. Do not believe anyone who provides a deal that's too good to be true - it probably is: Frequently debtors come across debt management deals that promise to decrease their debt by half in short time. This rarely happens; however, the debtor does wind up paying high fees and a considerable upfront amount to the debt management company. Such companies also dissuade debtors from communicating with their lenders; this is never a good idea and invariably leads to a negative impact on the debtor's credit rating. If a debt reduction company promises to offer more than some interest reduction and counseling on getting out of debt and staying debt free, the claim ought to ideally not be taken at face value.
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