Yes, you can often switch debt relief / debt consolidation companies. When I started Ascend, I had so many people want to join who wanted to switch out of their debt consolidation companies because they had been lied to or not given information that was important for their decision.
The purpose of this article is to explain why you may want to switch debt relief companies.
Let’s get started.
First, let’s cover some reasons you may be looking at switching debt settlement companies.
Many debt settlement companies pitch that there’s no fee until the first debt is settled, but may not mention the fees after the first settlement. You may be looking at your statement and seeing that 25%-35% of the debt amount is being removed from your account.
For example, if an individual has $50,000 in the debt relief program at 25% of the enrolled debt, you would be paying $12,500 in fees. With a new debt relief company that charges 15%, you would be paying just $7,500 in fees.
Thus, you could save almost $5,000 by switching to a new debt settlement company.
Debt settlement cost variation is huge, and I really would hope that debt settlement companies would explain costs more upfront than putting the fees only in the client services agreement.
We built the free debt settlement cost calculator to help you compare costs to other firms to see how much you would save elsewhere.
You may have thought you were getting a debt consolidation loan, only to realize that your credit score has been falling. One of the biggest ways that debt consolidation / debt relief companies market themselves are through mailers that pitch a debt consolidation loan such as a 5.99% interest rate loan that you are "prequalified" for.
One individual we worked with recently just switched because the debt settlement company didn’t prioritize debts where lawsuit likelihood was high, so they actually got sued while in the program.
Another common issue to switch debt settlement companies is due to lack of progress with your debts. For example, if you were told that the debts would be negotiated in the first 2 months, and now it's been 3-4 months and no progress, you may be looking to switch.
You may be 6-8 months into the program and none of your debts have been settled. In this case, you may have checked with them and not gotten straightforward answers why there’s so little progress on your account.
There are some challenges when switching debt settlement companies, so let’s cover the process to switch debt settlement companies.
When you enroll in a debt settlement company, you will generally sign a client services agreement. This client services agreement will generally house the cancellation language. Here’s Ascend’s old cancellation language when we were practicing more debt relief.
With Ascend, you would email us that you would like to cancel the program. After that, we would cancel the program within 48 hours.
The items that need to be canceled are the monthly drafts, and you may receive a refund for the funds remaining in your account.
One of the biggest questions we receive is how to switch debt settlement companies when you have a settlement in progress with your current debt settlement firm.
If you are currently in a debt settlement agreement, some individuals will limit the draft to only the amount that is needed for the settlement. In addition, you would tell the debt settlement company not to settle any other accounts.
Please make sure to also include the amount for the escrow bank account fee as that may be around $8 - $15 monthly.
Utilize the cancellation policy for your current debt relief company. Make sure you understand whether you will receive a refund and how much that refund will be.
Your dashboard may show that you are no longer enrolled.
Next, you would receive a new client services agreement from the debt relief company you will work with.
You would review the document for the fees and ask specific questions. For example, you may want to wait until the following month for the first draft if you just got drafted this month from your old debt relief company.
After that, you should now be set up with the new debt relief company.
There are various pros and cons to consider when deciding whether to switch debt relief companies.
If your current debt settlement has extremely high fees and does not consider lawsuit likelihood, you may strongly consider switching debt settlement companies. Compare the cost of your program to other debt settlement companies to help make the most informed decision.
