Not All Debt Consolidation Companies Are Equal – Important Questions

Last Updated: October 26, 2023



What to Ask Before Choosing

Whether you are looking for help with debt consolidation, credit counseling, or debt settlement, it is important to know that not all debt consolidation companies are created equal. If you're curious about the processes involved, learn how debt consolidation companies work.

What separates one company from another?

How long have you been in business?

Let’s face it, you don’t want to trust your money to an overnight start-up. You might be wondering if a debt consolidation loan is right for you. At Pacific Debt, we have been helping consumers since 2002 and have settled thousands of debts representing hundreds of millions of dollars.

Is the company highly rated by the Better Business Bureau?

Before diving in, it's essential to understand what debt consolidation is and how it works. Do you really want to trust a company with an F rating and loads of complaints? Companies that are Accredited Members of the BBB make a commitment to marketplace ethics and are required to resolve consumer complaints to maintain their memberships.

Remember, all companies get complaints, it is how a company responds and addresses those that separate the good from the bad. We are proud to say that Pacific Debt is an Accredited Member of the BBB of San Diego with an A+ rating.

Is the Company a member of any Industry Trade Associations?

Trade associations often set many of the standards in the industry and their members are required to meet minimum requirements to maintain membership.

For instance, in the debt settlement space, the American Fair Credit Council (AFCC) requires that each Accredited Member company undergo an audit once per year to ensure that member companies are not charging upfront fees and are complying with all AFCC standards.

Will you receive personal service?

Some companies treat you like a number and basically have huge call centers designed to answer your calls, but rarely offer you any personal dedicated service. At Pacific Debt, we created a system where all of our clients get a dedicated Personal Account Manager who is there to guide them through the process from the first settlement until completion.

Our Account Managers get to know our clients on a personal level so that you don’t have to deal with the aggravation of explaining your situation over and over again to a different call center representative each time you call.

What are others saying?

If you scour the Internet you can find all sorts of review sites and comments on social media. If clients have a good experience, or a bad one, they like to talk about it online. In fact, due largely to our great client reviews. Our average user score of 9.7 on the BestDebtCompanys site is a direct reflection of our commitment to customer service and delivering value to our clients.

What fees will I pay?

Be sure to ask about all fees you may incur when working with a debt relief company. 

Common fees include:

• Set up fees
• Monthly service fees
• Debt settlement fees (charged as a percentage of settled debt)
• Maintenance fees
• Cancellation fees

A reputable company will be upfront about its full fee structure. Make sure you understand all costs before signing up.

What's the debt settlement process and timeline?

The debt settlement process typically follows these steps:

1. You stop making payments to creditors and instead save money in a dedicated account.
2. The debt relief company negotiates with your creditors to settle debts. This may take several months of back-and-forth.
3. Creditors agree to settle for less than the full amount owed. Often between 40-60% of the debt.
4. You make a lump sum payment from your dedicated account to the creditor to settle the debt.
5. The creditor considers the debt resolved.

This process can take between 2-4 years from start to finish depending on your specific situation. Be sure to ask any potential debt relief company about their average timeline.

How will debt settlement affect my credit?

Debt settlement often has a negative impact on your credit score in the short term. When you stop making payments, your accounts become delinquent which damages your credit. Settling debts for less than owed also shows as negative marks.

That said, paying off all your debts through settlement can help your credit in the long run. Be sure to ask potential companies about their strategies to minimize credit damage.

How will you negotiate with my creditors?

Ask potential debt relief companies about their specific strategies for negotiating with creditors.

Things to find out:

• Do they have pre-existing relationships with major creditors that facilitate negotiations?
• What concessions do they typically achieve - lower interest rates, waived fees, lump sum settlements?
• On average, what percentage of debt do they get waived by creditors?
• How long does it take them to secure a settlement offer?

A company with a strong track record of negotiations will be transparent about their process and results.

Do you offer credit counseling or other services?

Many debt relief companies only handle debt settlement. 

Others may provide a wider range of services like:

• Credit counseling and financial education
• Debt management plans
• Bankruptcy advising
• Student loan consolidation

Consider if you need additional services beyond debt settlement. Having multiple options under one provider can streamline the process.

How can I compare multiple providers?

It's a good idea to explore multiple debt relief providers before deciding on one. Here are some tips for comparing:

• Consult debt relief review sites to see ratings and customer reviews.
• Check the BBB page of any company you're considering to view complaints.
• Ask for a free consultation and compare what each company tells you.
• Compare fee structures - what you pay can vary greatly between providers.

Doing thorough research will help you find the best fit based on your financial situation.

FAQs

Conclusion

When researching debt relief companies, it's important to understand that not all providers are created equal. You want to find a reputable company that offers the services you need at a fair price. Be sure to ask questions about their years in business, reputation, fees, debt settlement process, timeline, credit impact, negotiation strategies, and other services offered. Also, compare reviews and complaints on third-party sites. Do your homework by asking the right questions.

The bottom line is that you have a lot of choices when it comes to selecting the right debt consolidation company and the reality is that not all debt relief companies are equal. However, by asking the right questions and doing your homework, you can find the right option and company for you.

If you are struggling with overwhelming debt and want to explore your debt relief options, Pacific Debt Relief offers a free consultation to assess your financial situation. Our debt specialists can provide objective guidance relevant information and support to help find the right debt relief solution.