For consumers that are considering debt settlement as an option to get from under crushing credit card debt, then this article will cover some of the basics to help consumers make an educated decision when choosing a Debt Settlement Company.

Unfortunately in the Debt Settlement arena, there are many companies that are not working in the consumer's best interest. There are many "fly-by-night" companies that are popping up nationwide that are conducting unethical business practices that are misleading to consumers. Consumers need to be aware of the following red flags:

Fees - Some companies will charge an enrollment fee which could range from a couple hundred dollars and then a settlement fee which is usually 5% - 20% of the total debt amount. A lot of debt settlement companies will "Front Load" their fees, what this means is that they enroll you in a program that is structured in a way that the company is getting all of their fees within a few short months. The problem with this structure is that once these companies have received their fees in full within the first few months, then they have little or no incentive to actually continue working the consumers file. The ideal situation is to find a company that will spread out the settlement fee throughout the program so that you will start to see some of your debts being settled before you pay them in full, this way you know that they will be motivated to actually help you throughout the entire process.

USOBA - United States Organization for Bankruptcy Alternatives - Most legitimate debt settlement companies are accredited members of this organization (USOBA) and undergo regular audits to verify that they are adhering to all federal, state law requirements, regulations and USOBA's best practice standards. USOBA makes sure that all their members will service consumers with honesty and integrity.

Misleading Quotes - there are some "bait and switch" companies out there that will quote significantly low payments and fees to lure consumers in. How they do this is they use saving of 70% - 90% of the total debt, which is possible but not typical results that are negotiated on a daily basis by these companies, instead the typical savings are more like 50%. These are the same type of companies that will try to collect all there fees with the first few months on the debt settlement program, without the consumer seeing any results or work being done. When most consumers catch on to this scam and realize their debts cannot be settled this way, it's normally too late, as the consumer has already paid most of the settlement fee which is non refundable.

This just leaves the consumer in a worst position as they have been scammed out of a few hundred or thousands of dollars and nothing have happened with the debts they tried to settle. Instead consumers should finding a company that base their numbers on 50%, which is the industry standard for a worst case scenario, then this will allow consumers to set their expectations correctly. The other good thing with this approach is if the debt settlement company is able to negotiate savings more than 50%, then this will be a good surprise instead of a bad one.

Author's Bio: 

Marlon Baugh is a nationally-known debt elimination expert. Since 2003, he has specialized in Mortgage Loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Florida Loss Mitigation and debt settlement. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit or Call 954-678-5796