What Should You Expect to Pay for Debt Settlement Services?

The goal of debt settlement is to help debtors clear up financial obligations in the simplest and least expensive way possible. To accomplish this, settlement agents negotiate with creditors on your behalf to reach agreements by which the debt can be laid to rest for the least amount of money out of your pocket as possible. Sound too good to be true? Well, there are some caveats, such as what you should expect to pay for debt settlement services.  

How Settlement Fees Are Assessed 

According to the debt settlement experts at the Consumer Financial Protection Bureau, debt settlement companies typically charge a percentage of the total amount of debt owed by the consumer. This average between 15 and 25% of the total debt settled. The good news is you only have to pay when the debt is resolved to your satisfaction. Federal law prohibits debt settlement services from requiring payment up front.  

Do Your Research  

Before you sign any contracts or enter any agreements, it’s important to take the time to read your contracts carefully. Make sure you understand how much you’re being charged and what services are being provided. It’s also a good idea to do your research on companies like Freedom Debt Relief debt settlement services before making commitments. Visit the company website and read through reviews on sites like Yelp and Google Reviews.  

You can also check with your local Better Business Bureau to determine if the company you’ve chosen is registered, how they handle complaints and what their BBB rating is. The BBB gives businesses a rating on a scale of A through F. Companies who are A+ rated reported fewer customer complaints and higher issue resolution rates. Companies who rank below a C on the scale often report higher incidents of customer complaints and low customer satisfaction. Use reviews and ratings as a guide map to help you choose the best company for your specific situation.  

Details to Bear in Mind 

Now that you’ve done your research on what you should expect to pay for debt settlement services, you should be aware of the following key takeaways. 

• Debt settlement involves offering a one-time payment in full to a creditor in exchange for a portion of your debt being forgiven. 
• Successfully negotiating a debt settlement plan requires the cessation of payments on that debt, in order to accrue the funds needed to complete the settlement agreement. This will incur late fees, additional interest payments and potential damage to your credit score. 
• Typical debt settlement offers range from 10% to 50% of what you owe. 
• Allowing debt to go unpaid while you’re in a settlement program could result in you getting sued by the creditor in question. 

There are no guarantees creditors will accept settlement proposals, though most of them do. After all, it’s better to make a deal with you and get something, than force you into bankruptcy protection and potentially get nothing.  

Contracting a Credible Settlement Firm 

Do your research by checking the company’s ratings, reviews, and posts on consumer protection websites like the Better Business Bureau before entering into a debt settlement agreement.  

Beyond wondering what you should expect to pay for debt settlement services, it’s important to ask for evidence of results and typical outcomes. You should also inquire about worst-case scenarios as well as success stories before signing a contract with a debt settlement company.  

Find out what other services the business provides and how long it may take to get the results you’re after. Above all, don’t rely on verbal promises. Get everything in writing and read the contract carefully.