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Do You Know What a Debt Settlement Company Does?

Posted By:  |  July 21, 2015  |  1 Comment(s)

BDC settlement graph
Paying back your debt is not an easy task, let alone trying to understand which debt solution is right for you. Debt resolution companies seem to be everywhere and are constantly bombarding you to get your business. But how can you pick a the right debt resolution company if you can’t figure out what type of resolution is right for your needs?

The BestDebtCompanys.com team created a survey to get a better understanding of how users’ knowledge about debt resolutions companies, specifically debt settlement companies.

The survey, which collected 1,000 responses, asked the question: “What does a debt settlement company do?” Here are the following responses and their percentages:

    Negotiates with creditors to lower your debt: 41.4 percent
    None of these: 34.2 percent
    Combines debt into one monthly payment: 15.2 percent
    Works with the IRS on behalf of your debt: 5.8 percent
    Lowers your overall interest rate: 3.4 percent

The highest number of respondents, 41.4 percent, chose the correct response that settlement companies “Negotiate with creditors to lower debt.” Of those 41.4 percent of respondents, 53.2 percent were 65 years or older. This is interesting because it shows that age does affect who picked the correct response. It could have something to do with the fact that they have been around longer and understand how the debt resolution process works, or have a better understanding of their finances in general.

The next highest answer response, with 34.2 percent, chose “None of these.” After knowing what debt settlement companies do, the next highest response was not knowing at all what these companies. It is interesting that people seem to know exactly what settlement companies do or have no idea how settlement companies help them. This misunderstanding can cause serious confusion when it comes to looking for debt resolutions.

This survey regarding what settlement companies do, brings up a bigger issue around the debt industry as a whole. It seems that people either know exactly what they are looking for or have no idea what they need. TheBestDebtCompanys.com have created various articles that break down the differences between debt solutions and are continuing to look for ways to enhance the user experience to help user pick the right solution for them. This survey is a stepping point towards helping people to understand what settlement companies do and the difference between the types of debt resolutions.

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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