Thursday, February 18, 2010

Why are debt settlement companies protesting BBB’s new rating system?

Author: Robin Williams

Debt settlement is one of the debt relief options that many cash strapped debtors opt for. In this debt help option, the total debt you owe gets reduced by as much as 40% to 60%. This is usually made possible by debt settlement companies that negotiate with creditors to reduce the outstanding balance. And when a debt settlement or a debt relief company is hired for their services, the consumers usually check the Reliability report of the Better Business Bureau to find out if the debt settlement company is worth being hired.

The Better Business bureau earlier rated businesses as “satisfactory” or “unsatisfactory”. However, since 2009, it has changed the way it rates companies. Under the new system, the BBB will grade a company on a scale ranging between A+ and F. There will be 16 categories on the basis of which a business will be rated. The new grading system has been applied to around 4 million companies listed in the database of Better Business Bureau.

The TASC or the Association of Debt Settlement Companies warns that “Under the BBB’s new rating system, it is virtually impossible for a debt settlement company to be rated anything other than a ‘D’ or ‘F’”.

In a letter that was addressed to National Council of Better Business Bureau, the Association of Settlement Companies said that “there are critical flaws in the BBB’s consumer grading system as it applies to settlement firms.”

Consumers are of the opinion that debt settlement which is an alternative to bankruptcy can prevent many from declaring themselves bankrupt if they can derive benefits from a debt settlement program.

However, under this grading system almost all debt settlement companies will be given a poor rating. TASC is of the opinion that the main reason why the debt settlement companies are being rated low is due to the fact that Better Business Bureau doesn’t consider debt settlement as an effective debt solution that can help debtors get rid of debts.

If you are planning to hire the services of a debt settlement company, it is best to do a bit of homework and then settle for a company that is reliable. A BBB rating may mislead you due to the low grade it gives to a debt settlement company.

1 comment:

Debt consolidation said...

it’s a good proposition for debtors. And once you get yourself free from debts, make proper planning in future and handle your financial matters intelligently and logically.

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