Top 4 Best Debt Relief Companies ( BBB A+ Rated )

Most debt collectors are willing to negotiate and settle an outstanding debt for less than you actually owe. They know that the longer the debt goes unsettled, the less likely that they’re going to recoup anything at all. However that doesn’t mean that it’s advisable to stop making payments so that you can negotiate debts for less. Your credit profile will be absolutely ruined if you go that route. And watch out for companies that suggest doing this, it borders on illegal.

Usually a creditor won’t negotiate a debt until after you’ve missed 6 month’s payments. The trouble is that by this point they’ve probably charged off the account and sold it to a collection agency. So even though you may be able to settle more easily, the hit that your credit scores are going to take is substantial.

What Debt Settlement Companies Aren’t Telling You

The biggest thing they’re not telling you is that debt relief isn’t for everyone. It’s meant to save people who are about to file for bankruptcy, but don’t qualify for a Chapter 7. It’s also going to work for anyone who’s prepared to pay off their debts and wants to see if they can get those accounts removed from their credit reports.

Your credit profile might suffer too. At first this is a result of not paying your bills on time. You’ve neglected payments and probably have a few collection accounts too. Settling debts won’t necessarily boost your credit score, but it should stop it from decreasing any further.

Usually debt relief companies fail to mention that any debt that’s written off is taxable. If a creditor forgives anything over $600 it’s considered taxable income. You’ll be getting a 1099 in the mail for income you’re going to need to declare. This isn’t always the case since the IRS doesn’t expect you to declare it if you were insolvent at the time.

You Can Find Ethical Debt Relief

The pricing for debt relief is outrageous sometimes, costing 15% – 20% of your entire debt. If a debt relief company can cut your debt in half it might be beneficial, but it’s usually an issue when you have to pay those ridiculous fees up front. Find a company that charges 5% or less of your total debt and look to see if they’re BBB rated. Obviously go with the “A’s” and not the “F’s” in the debt relief industry.

On the other hand, if you go it alone, keep in mind that debt collectors aren’t going to make it easy on you. Everything should be in writing and your paperwork should be exceptionally organized. You might think that it’s a tremendous chore, but trust me, it’ll be worth it when you’re living debt free.

5 Ways to Help You Settle Your Debts

Finding debt relief can prove to be remarkably similar to learning how to ride a bike. Of course the stakes are much higher, and the idea of simply picking yourself and dusting yourself off after you fall can seem like an insurmountable task. So with that in mind, I’ve compiled a list of the top 5 ways to help you kiss your debt goodbye.

1. Come up with a budget. The best way to start getting a handle on your finances is to create a monthly budget for yourself. This will help you not only get a fix on how much you’re spending vs. how much you’re making, but it’ll help you map out a plan for paying down your existing debts.

2. Knock ‘em out. Now that you’ve got a better look at your available finances on a monthly basis, you should immediately get to work on knocking your bills down a few notches. A great place to start would be accounts that come with the highest interest rates. Since those interest charges make paying down the actual balance more of a chore, you’ll want to knock them out as fast as you can so you’re paying your actual bill, and not just the tacked-on interest.

3. Rollback 30% or less! Once you’ve got your high interest debts cut back, get ready to take an axe to the rest of your financial line-up. You’ll want to pay down your balances to around 30% of their available balances. So if you’ve got a Visa card with a $5000 available balance, try and keep the overall expenses on that card to no more than $3500.

4. Look for other ways to save/make money. If you can, consider taking a second, part-time job for a few months to help reduce your debt. Barring that, you can always hold a garage sale. You’ll have more money to take down your debt and you’ll have cleaned out any junk you never used anyway.

5. Call in the professionals. If you feel like your bills are piling too high and can’t even begin to think about taking care of all your bills yourself, consider consulting a debt settlement agency. Many are skilled at negotiating your debts down to considerably more manageable balances and can make the road to financial recovery that much easier.

I also recommend reading – Debt Consolidation Loans Guide

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