Make Sure You Understand Your Debt Settlement Program Contract Before You Sign

Read before you sign! This is a standard warning we hear about everything from employment contracts to car loans to those ubiquitous privacy notices at doctor’s offices. It is important to always read – and understand – anything you sign, and it is doubly essential when it deals with finances. When working with a reputable debt settlement program it is vital that you understand the terms of the agreement, your obligations, and most importantly, your rights. Here are some tips to consider before signing any contract or paying any fee.

First, speak with a financial counselor or resolution expert. Often, reputable businesses will offer free consultations so you can determine if debt relief is right for you, which options to pursue, and how to begin. During counseling, ask as many questions as you can. Even if you feel they are “dumb” questions, ask them. There are no dumb questions except those that go unasked, especially with finances. If you do not understand something, ask for another explanation. Often, we may just need to hear something a different way for it to resonate with us. Don’t be afraid of appearing unknowledgeable; it is the job of financial experts to guide you. Let them.

If you feel like your questions are not being answered or you are not being treated with the dignity you deserve, cease working with that counselor and select someone else. You do not ever need to work with those who do not work for you and with you to better your financial situation. All of this will help you understand the terms of the contract so you know what you need to do and what the settlement or management company will do for you. You may feel a sense of urgency, but do not let that crowd out the necessity of proceeding with caution.

In your contract, it will tell you that your credit score will worsen before it gets better. If this causes alarm bells to ring in your head, good. It should. Ask about it. You will be told that as your resolution specialist negotiates with creditors, you work on paying one at a time. As you pay each creditor, it is reported to the credit bureaus and your score improves. But it does dip before it rises, so you need to be aware of that.

Look for any information on fees paid to the management or negotiation company. You want the vast majority of your money going into your debts, not to service fees. Check on this before you agree to use their services. On the other hand, non profits may not be the best solution. Many do not realize that a lot of “non profit” organizations are actually funded by credit card organizations. Guess whose interest they have at heart? Certainly not yours. Find out who or what funds the settlement company before you sign a contract.

Contracts are written in legalese, and this can be tremendously difficult to understand. When dealing with contracts, it is best to have time to study them and ask questions. You should be given time to do this before you sign. If you are pressured to sign before reading or your questions are not answered, please do yourself a favor and select a different management company. There are those that are backed with strong attorney networks and have years of experience in the field. They can offer help with your finances and understanding your contract.

Some of the best advice you will find as you work to become debt free is read before you sign. Take the time to understand what your debt solution.