If you’re already in debt and trying your best to skirt bankruptcy, debt relief may indeed be for you. But if you have questions about the financial strategy and wonder whether debt relief companies are legitimate, keep reading.

What is Debt Relief?

With this approach, which is also called debt settlement, you’ll get a company to negotiate with your creditors to get them to “settle” your debt for a percentage of what you owe. Why would they do that, you ask? Well, it IS true: creditors would like every cent of what’s contractually due them. However, they know that if they don’t negotiate, you’ll likely file for bankruptcy, which will probably net them zero.

How Does Debt Relief Work?

You’ll have a consultation during which a certified pro will size up your situation and work with you to put together a program. After that, you’ll make deposits each month into a savings-type account that you manage. Once you’ve saved enough, your settlement company will start negotiations with your creditors, using your account as leverage. Once each debt is settled, and you’ve signed off on terms, the creditor will be paid from said account. The process repeats until all your debts are settled.

What Kind of Debt is Accepted?

It depends on the company, but unsecured debt from credit cards, medical bills and personal loans are common. Unsecured debt, by the way, is that which isn’t attached to collateral such as your house or car.

How Much Will Debt Relief Save Me and How Much Does It Cost?

In most cases, you can expect savings of around half your total debt, sometimes more. And fees vary, but they’ll usually come in around 15% to 25% of all the settled debt.

How Long Does Debt Relief Take?

Typically, it takes between two to four years, depending on your debt load and savings. Not long at all, really, when you consider how long it would take you by making minimum payments. Read: forever!

Will My Credit Be Damaged?

Not for long. Once you’re done with the program your scores will rebound. And keep in mind that your scores have been depressed for some time now anyway.

What About Debt Relief Scammers?

Or in other words, is debt relief legit? Absolutely. In fact, the strategy has helped scads of people like you over the years. Your job is to do your homework and make sure you have an accredited, established, reputable debt settlement company.

What are Characteristics of a Good Debt Relief Company?

As we say, accreditation is a good start. Try to find a company that’s a member of trade groups such as the American Fair Credit Council and the International Association of Professional Debt Arbitrators.

In addition, legit companies never charge you up front, as is the law. They aren’t allowed to bill you until they’ve settled a debt. Credible companies are also transparent about their fee structure.

Another thing good debt relief companies do is be realistic about your situation, amounts you can expect to save, and when you’ll likely be done with the program. Do stay away from companies that over promise or “guarantee” they can save you a certain amount without even going over your situation. They’re likely hoping to fleece you.

Are debt relief companies legitimate? Yes. And if you stick with the program, you’ll come out in sweet financial shape. Your job is to make sure you steer clear of the bad guys out there and choose an established, reputable agency.

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