How Debt Settlement Companies Make Money
The debt relief companies usually don’t make money. They usually survive on the principle that the money they make will be proportional to the money they save for the customers. This pricing model is extremely advantageous to the customers. The debt relief company will work harder to settle down your debt to fill in their pocket more and more.
Thus, if the debt relief company saves 60% for you, they will earn an amount “x”. But it they save something more than 60%, they will earn an amount equivalent to “2x” or something more higher as a commission. This is the basic pricing model of a debt relief company.
Good well-known debt relief firms will never ask you for a high commission upfront fee. They will always look out for the betterment of their customers and demand a fee which is reasonable and affordable to the customers. Remember, your savings should not replace the agency’s fee. That would make no sense then.
So that the debt relief agency people work harder for you, you can always offer them a additional commission fee which is reasonable to you as well. For e.g. - If the debt relief company is asking for a lump sum payment, you can always negotiate with them for the same.
There is a PIF (Pain in Full) letter which the creditors issue. If your debt relief company manages this letter for you from some or all of the creditors, you can offer them a extra commission fee. This PIF letter is very important for the customers and it can have some effect on your credit score. Thus, the debt relief agency negotiates with the creditor for your PIF letter and hence you must value it.
Also, make sure that you are quite comfortable with the debt relief agency in all the senses. Never forget to go through the terms and conditions of a debt relief company.