Debt Consolidation Companies – Deciphering The Differences Between Good and Bad

By | March 5, 2013

Debt consolidation sounds like a great idea when you are struggling to pay your bills. This is especially true if you have a high amount of debt that you racked up to cover medical bills or to pay for the essentials while you or your significant other was without a job.  However, you have to be very careful when choosing a debt consolidation company.

One thing to look out for are for companies, who make the initial contact with you over the telephone or either by e-mail. They promise you the world. They purport to be able to significantly cut your debt and your monthly payments.  When you are having financial trouble, this sounds like a godsend.  However, you have to be careful, because many of these telemarketing debt consolidation companies are in fact, scammers, who are looking to get your personal information or to ask for a ton of money upfront and then will bail.

Understand that any company who first contacts you or any company that asks for money up front should raise a red flag.  There are very many choices for debt consolidation companies.  You do not have to pay any upfront fee if you don’t want to.  Non-profit debt consolidation companies who have been in the industry for a long time and well respected don’t ask for an upfront fee. However, you will find some non-profit debt consolidation companies who add on a for-profit business, and they earn money by charging you processing fees as well as monthly fees.  Avoid these companies, because there are many good choices out there for you to benefit from.

Unscrupulous debt consolidation companies will also not give you all the facts when it comes to consolidating your debt.  For example, some creditors won’t allow you to work with another debt consolidation or credit counseling company for a certain period of time if you don’t finish out a particular program.  This can be very hurtful for you if you choose to look for another bill consolidation company after finding that the one that you have initially chosen is no good.  Bad debt consolidation companies may also not let you know that’ when you choose to get credit counseling or choose to consolidate your debt with a credit counseling company, that this will indeed go on your credit report and will affect it in a negative way for a bit of time.  Be sure that any company that you consider working with gives you all of the facts and the only way that you can get all of the facts is if you do your own research and perform your own due process.

Taking control over your own life and protecting yourself will be a very necessary part of you getting your finances in order.  To protect yourself you need to do a couple of things, research any company that you’re considering working with.  Be weary of people who contact you first promising to get rid of all your debt.  Check with the Better Business Bureau and see if there has been any negative reports submitted about a particular company. You may even want to Google a certain company to see if you can find any negative information about them online.

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