Debt Settlement Relief Companies - Are Debt Settlement Companies Safe?

Debt settlement relief is a process of reducing debts through negotiation, making it possible to clear the debts and become debt free. This is a specialist service offered by debt settlement companies who have trained and experienced negotiators working for them. Unfortunately, some people in serious debt have had bad experiences at the hands of a few debt relief companies, which can tend to create the impression that debt settlement is in itself a bad thing, or that debt relief companies are not safe.

I would never wish to defend any of the companies who take money from people who can least afford it and who fail to deliver the debt reductions they promise. This does happen, because some of the companies out there are far less interested in helping you than they are in helping themselves. However, it is important to understand that there are also many highly reputable companies who have helped thousands of people to get out of debt by successfully negotiating away millions of dollars worth of debt. The trick is in making sure you find the good ones!

You need not be concerned about being ripped off my unscrupulous organisations, provided you are armed with the right information before you go looking for a good debt settlement relief company. The first thing you need to have is a basic understanding of how the settlement process ought to work, so that you know if you are being offered something that you ought to be suspicious of. I will explain the basic principles of what will happen during debt settlement relief, and then tell you how to ensure you approach only the most reputable settlement companies.

Debt settlement relief is not the right answer for all debt problems, but it is highly effective for people who are in serious financial difficulties, and who are struggling to keep up with repayments. A debt settlement relief company will only be able to help you with debts which are unsecured, such as personal loans, credit card debts and store cards. They cannot do anything about debts secured against assets, such as your mortgage. Your debts will also need to be to several different companies for debt settlement to be effective.

When you get help from a debt settlement company, you stop paying your creditors and start making monthly payments into a new account instead. Meanwhile, an experienced negotiator will contact all of your creditors and begin the process of negotiating greatly reduced settlements for your debts. The time this takes can vary a lot, from weeks to years, and knowing when the time is right to strike a deal is a key part of the negotiating process. A good debt relief settlement company will usually get your debts reduced by between 40% and 60%. Your monthly payments continue to accumulate in the account, and are used to pay off each creditor as a settlement is reached.

Debt settlement is very well known and used in the US but is not really offered in the UK because there is a good alternative that achieves the same result. This is an IVA, which stands for individual voluntary arrangement, and it also involves writing off a large part of your debts.

Now that you have a basic understanding of the processes involved, you can start approaching debt settlement relief companies (or IVA providers) to see if they can help you. You will save a lot of time and remove the risk of using bad companies if you follow recommendations for organisations that are known to be very well established and which have a proven reputation for successful settlement.

This will narrow down your search to a shortlist of safe organisations, from which you can then apply to two or three and compare what they offer you. Getting the ball rolling is usually just a matter of completing a simple online form. Approaching more than one will also give you the opportunity to see how you relate to the individuals you deal with at each company, as it is important that you feel comfortable with the people you are going to be dealing with.