How Much Should I Pay For The Best Debt Settlement Company

If you have heard the advertisements on television or the radio, or seen newspaper ads regarding debt settlement or the ability to get a "bail-out" from your unsecured credit card debt by simply calling an 800 number and answering a short questionnaire, you may be skeptical and curious about how much this will cost. What's in it for the debt settlement companies, and how much will you have to pay to work with the best debt settlement company to get your debt settled? So, how much should you pay for the best debt settlement company? The answer varies widely, and in some cases there is no correct answer, because the amount will depend on how much your debt settlement company charges, and how they collect these charges.

Fees for Debt Settlement

Debt settlement companies have a variety of ways by which they charge fees for their services:

• Some debt settlement companies take your total debt and add a percentage, usually between 15-18% up front, which you have to repay before they will start paying off your settled debt for you.
• Other companies will charge a percentage of the amount which they settle – usually 20-25% -- which is again payable up front before they will start actually using it to pay back the debt which they have settled for you.
• Still other debt settlement companies charge sign up fees and monthly fees, and some charge a flat monthly fee each month until the settled debt is completely repaid.

There's no need to say it, but this can get expensive, and confusing. Imagine if you are settling $10,000 worth of debt. At 15-18%, you will be paying $1800 to settle this debt. At 25%, it would be $2500! And the monthly fees and sign-up fees can add up as well. Keep in mind also that your first year or more of payments could be dedicated to repaying the debt settlement company, so during that time you are not actually reducing your debt, just paying for the service of having your debts settled. There are no laws governing what fees debt settlement companies can charge, or how much, so you may find wildly different fee structures depending who you are dealing with.

Getting Help

In many cases it is better to settle your debts with a debt settlement attorney. Attorneys typically charge a flat fee or a retainer, and attorneys are bound by their oaths and the state bar association to be honest and up-front. Debt settlement companies, on the other hand, are unregulated and often newly-formed companies.