Wondering if Debt Settlement is Right for You?

COLUMBIA, Md., March 17 /PRNewswire/ -- A lot of talk has surfaced recently about the practice of debt settlement. As a largely unregulated practice, debt settlement has gotten a bad name with consumer advocates.  In many instances, companies charge outrageous amounts and don't deliver success.

But it is important to keep in mind that debt settlement is the right choice for nearly 30 percent of consumers who want to get out of debt, and that there are credible companies providing successful, legitimate and fair services to consumers.

Debt settlement allows consumers to pay back creditors what they can afford, which is typically less than the full balance that is owed. For consumers considering debt settlement, it's important to know what to look for in a service and if it is the right option for solving debt problems. There are four key elements to help decide if a company is trying to help the consumer or just trying to help themselves: fees, guarantees, support and options.

Fees: It is okay for companies to charge a fee for helping consumers get out of debt, but it's important to note when the debt settlement company takes its fee.  Avoid companies that make most or all of their money upfront. "It's the difference between paying for a job promised or a job well done," says Jenny Realo, executive vice president for CareOne Debt Relief Services.  "Paying a nominal set up charge is normal, but don't fork over thousands of dollars to a company that hasn't settled your debt."

The practice is called "back-end success fees" in the debt industry, and it is the right way to do business. A number of states including Florida, Illinois and Maryland, as well as the Federal Trade Commission, are considering requiring debt companies to take most of their fees only after they have successfully settled the consumer's debt.

Guarantees: Another element to consider is whether or not the company guarantees its work.  If they can't settle your debt, do you get your money back?  In the first 180 days of enrollment, CareOne will return the consumer's money, including fees, if they are not satisfied with the progress the company is making to resolve their debts.  This includes the activation fee, monthly fee and even any success fees that had been paid.  

Support: Find out what the company provides the consumer while they are going through the settlement process. Is there an accredited financial counselor to assist you?  Do you have a hotline to call if you need advice?  Are there educational programs or materials to help you make smart financial decisions in the future?

In addition to financial counseling and debt management programs that CareOne provides, the company created the My CareOne community, an online support group aimed at connecting consumers who are trying to get out of debt while providing free tools and resources. Through a personalized portal, customers can access a savings planner, a collection of debt management success stories, financial advice from the company's own experts, and access to community forums where they can discuss debt management, budgeting, and other personal finance issues with those facing similar situations and hurdles.  

CareOne financial experts also monitor the community to answer questions and provide some advice. In addition to the expert feedback, the community features bloggers among various life situations (married with kids, single and in debt, divorced, remarried with kids, etc.) who regularly post updates with tips and advice to help consumers manage their money better and make the most of the debt relief program.

"Being in debt can be scary and frustrating," says Realo.  "You need someone to help you through the process so you can come out on top."

Options: Finally, ask the company if they provide other products besides debt settlement to help you take control of your finances. Companies that only offer debt settlement services may try to sell you this option when it is not right for you. Good companies will offer a range of debt relief services such as free education, budget training, debt management plans and, if appropriate, referral to a bankruptcy attorney. Remember, debt settlement is the right approach for only about 30 percent of consumers, so don't get trapped with a company that only offers this one option.

But for whom does the debt settlement bell toll?   "People who qualify for debt settlement fall between two camps," says Realo. "They are too far in debt to manage repayments on a monthly plan but they aren't in so much trouble that they need to file for bankruptcy. It's a choice that should be made with a trusted financial counselor. And remember, you should never have to pay to get objective advice from an accredited counselor."

CareOne has been helping hundreds of thousands of consumers with debt relief services since 2002, but just added debt settlement services in 2009. In the first few months that CareOne has provided the debt settlement service, the company has helped consumers in 11 states settle more than a quarter of a million dollars of debt to become more financially stable. In one case, the company was able to negotiate so that the consumer only had to pay 13 percent of their total debt.

In addition to debt settlement, CareOne is an established provider of debt management programs and free credit counseling in 37 states. To talk to a counselor about financial counseling, debt management or debt settlement, consumers can go to www.careonecredit.com  or call 1-800-373-3225.

About CareOne Debt Relief Services

CareOne Debt Relief Services Inc. was formed in 2002 to provide consumers with multiple solutions to complex money problems. CareOne Debt Relief Services boasts a unique Financial Fitness Center that examines each consumer's individual financial situation and develops a personalized solution to help the consumer get out of debt and strengthen his or her financial footing.

CareOne Debt Relief Services has helped hundreds of thousands of consumers. CareOne takes a holistic approach in assisting customers to manage their debt, looking at an individual's situation and creating a solution that is achievable and works. CareOne does not offer to change or improve an individual's credit score, record or rating.  CareOne goes beyond providing the standard debt payment programs, helping consumers address day-to-day life issues that are the result of being in debt along with free educational tools online.

SOURCE CareOne Debt Relief Services