Four Tips To Help You Avoid A Bad Debt Consolidation Company

[Mar 25, 2009.]

 

Consolidating consumer debt is a great way to save money on interest, simplify monthly payments, and make existing debts much more manageable. However, like in any other industry, there are bad debt consolidation companies that should be avoided. Here are a few tips to help you avoid such companies.

1. Investigate Debt Consolidation Companies On Your Own
Although debt consolidation companies may advertise their state certifications, counselor certifications, and affiliations with organizations such as the Better Business Bureau, it's best to still investigate further on your own. Before hiring a debt consolidation company, check with your state's attorney general office and federal trade commission. If anything arises from these searches, proceed with caution or avoid that company altogether. Additionally, it is often helpful to hear testimonials and experiences from past clients--just make sure these stories are authentic and not influenced in any way.

2. Avoid Debt Reduction Offers That Sound Too Good To Be True
Cut your debts by 50%! Become debt-free overnight! 100% guaranteed success!
While some of these offers may be attributed to creative marketing found in any business, be sure to distinguish the difference between such marketing from ploys to lure in the desperate and needy. Although it can be tough for consumer's with mounting credit card debt and excessive personal loans to ignore such offers, playing it safe will often save individuals from more headaches in the future.

3. Carefully Analyze Any Debt Consolidation Costs
In addition to non-profit debt consolidation companies, many reputable organizations will have their own fees. Just be sure to avoid any unusually high upfront fees or excessive monthly maintenance fees. Unfortunately, excessive fees can be your warning sign of a common debt consolidation scam. Such methods are quite common among scam companies who are simply looking to make quick profits, and fail to deliver on their promises.

4. Hold Your Creditor Payments With Extreme Caution
Suspending your creditor payments is a very delicate process that should be approached with caution and professional guidance.  Such methods are quite common when debtors are advised to cease making payments to creditors, and save this money towards a fund to eventually negotiate a final settlement offer. However, as soon as a debtor ceases their monthly payment, their credit history and creditor relationship is at stake. If a debt consolidation companies advises you to cease your monthly payments, consult with an additional third party, such as a financial advisor, to make sure this is the best solution.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.