Once you have chosen a debt settlement business to work with, you will be asked to sign a client agreement. A the very least, the agreement should contain the following information. If it doesn't, don't sign it.
1. List Of Debts A list of all of your unsecured debts at the time that you are signing the agreement. This list should include the amount of each debt, along with the creditor's name and any other identifying information such as address and telephone number.
2. Total Of All Debts After listing all of your debts, the agreement should also contain a grand total of all of those debts.
3. An Estimation Of Settlement Funds Required This is a very important piece of information that needs to be included on the agreement that the debt settlement business prepares and presents you with. In fact, this is a figure that you should discuss in depth with the company prior to agreeing to enter the program. A general rule of thumb is that you will need to save (or acquire in another manner) approximately 50% of the total amount of your debts listed in #2 above in order to fund future settlements. Also, you should be aware that this 50% figure does not include the fees that you will have to pay the settlement company for acting on your behalf.
4. The Number Of Monthly Installment Payments Required Once you have determined your total debt figure (step #2 above) and decided on an estimation of the funds that will be required (step #3 above), you then need to determine how many months it will take you to save this much money.
As I alluded to above, you will likely need to raise about 50% of the value of your outstanding debts, plus any settlement fees due, in order to complete the program. These funds are typically raised by borrowing (from a friend or family member, or against an asset like your home) or by setting aside savings each month during the program.
If you borrow the necessary funds, then you will not have to save money each month to fund the settlements (although you will have to make payments on the borrowed funds so you are not completely off the hook).
If you are planning on saving the money over time on the other hand, then you must determine how much you can save each month, and based on that, how many months it will take you to save the necessary funds.
5. Fees Charged By The Debt Settlement Business This is a very important section of the agreement. Make sure that all of the details surrounding the fees are laid out clearly. If you have any misgivings or questions about the fees, do not sign the agreement until you have your questions answered.
The agreement should contain details on the total amount of the fees (or an estimate if the fees are being calculated based on the amount of savings you realize), exactly how the fees are calculated and exactly when and how those fees will be paid.
6. Cancellation Details Make sure that all cancellation procedures and policies are clearly laid out in the agreement before you sign. Never trust a verbal agreement on cancellation policies.
7. Disclosure Statement All debt settlement businesses should provide you with a disclosure statement prior to you signing an agreement. This disclosure statement should be attached to any agreement and should form part of that agreement. Read more on debt settlement agreement disclosure statements, and what exactly should be included here.
8. Details Of The Services To Be Provided The agreement should contain a description of the services being provided and an approximate time line of when these services will be provided.
9. Information On The Debt Settlement Business Specifically, the name, address and telephone number of the company.
10. Details Of Service Provider If the person or company providing the actual debt settlement service differs from the company that you are signing the agreement with, then you need the legal name and legal address of this service provider.
11. Notice Of Rescission If you choose to "rescind" or nullify the agreement, this notice will detail how and when you can do this.