Debt consolidation services - Things to watch out for with debt counseling companies

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Many of the debt consolidation companies are professional in their dealing with clients. These debt consolidation companies believe in providing the right service and their business increases not by advertisement but by word of mouth. However, there are also some sour grapes in the debt consolidation industry. This is the sole reason experts advise consumers to adopt caution when you consider a debt consolidation service. Many such fly by night debt consolidation firms will attract consumers with low initial fee and you might then get stuck with paying higher monthly fees for as long as the debt consolidation service is provided to you. If the company claims to be non-profit research and make sure that the company is really non-profit and is not a for-profit company.



Debt problems - Online debt consolidation guide
Online debt consolidation programs help individuals to research, apply and take part in debt reduction programs. The consumer can manage the financing of debts at the click of a mouse. With the problem of excessive debt growing on today, online debt consolidation programs are becoming easy and beneficial. An online debt consolidation program can allow a consumer to get a loan that will ... Read debt consolidation article



Debt consolidation services - Things to watch out for with debt counseling companies
Debt consolidation services can provide a valuable service by lowering your interest rate with creditors, enabling you to pay off your unsecured loans and bills in a short period. However, there are companies that would rather take your money than help you. To avoid such scams, watch out for the following.

Low Monthly Payment Claims

While debt consolidation companies can lower your interest rate which might lower your payments, they cannot negotiate lower minimum payments. Creditors no longer accept smaller payments since 2004, not even for "hardship" cases.

One trick companies use is to lure customers in with a low quote, only to jack up the required payment in a month's time. By that time you have already paid out fees, which aren't refundable.

Upfront Fees

Another shady practice is to charge large upfront fees when a company is claiming non-profit status. Legitimate companies will either charge a small monthly fee between $14 to $69, depending on the number of accounts. The other fee structure is to charge a reasonable fee for each account handled; typically for-profit companies use this structure.

If you are being asked to pay thousands, especially with a cashier's check or money order, look for another program.

Offering Debt Negotiation Programs

You should also be suspicious of companies that pressure you to use other programs, such as debt negotiations. First of all, debt negotiations or settlements usually will not improve your credit situation. Secondly, you will be charge high fees for something you can do on your own. And finally, companies who specialize in debt consolidation have no incentive to see you flounder with your finances, unlike those offering other services.

When you are looking for a debt consolidation program, ask questions about the program, fees, and amount of time to repay your bills. Take advantage of the internet and research several different agencies.

Since debt and bill consolidation varies with the number of accounts involved, you should expect a phone consultation before you receive any quotes. With your quote you should receive detailed answers, including pay off dates for each account and exact fees. And if you feel uncomfortable with the agency, feel free to walk away. A consultation is not a commitment on your part.

To view our list of recommended debt consolidation companies online, visit this page: Recommended Sources for Debt Consolidation Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

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Debt consolidation and management - How to do it yourself DYI

Debt consolidation is a big business, especially on the internet. Companies advertise offering to "lower your payments by 50%" and claim to be nonprofits, giving consumers the idea that it will be cheaper through them. It's not. Many firms offer a "debt settlement" program in case you are unable to make the payments calculated in their debt consolidation program. Some say that they handle IRS debts and student loans, as well.

Why are we so eager to hand our debt problems over to someone else? Anyone with high school math, actually 6th grade math is probably enough, can calculate their own repayment schedules and pay off their own debts if they choose. Anyone who can use a telephone or write a letter can call the creditor and ask about settlement amounts. Usually, the creditor is at least as eager as you are to reach some agreement and get the account off their books.

In order for any of these programs to work, you also must learn to stop incurring debts. That means: stop using your credit cards. Pay cash for everything. That gets us to the place where we are living within our means. The only debts that make sense are secured debts. Secured debts are things like car loans and home loans. If you are unable to make the payments, there is some valuable property that you can surrender to clear the debt.

I'm not saying all debt consolidation companies are bad. They're not. Some of them genuinely work to help the consumer who is emotionally distraught to the point that they cannot work out their own debt issues. It helps to have someone to hold your hand. However, to really end the problem for all time, you must change your spending habits forever.

For real help with changing your spending habits, we recommend Debtors Anonymous at Debtorsanonymous.com. Good information can also be found in "How to Get Out of Debt, Stay Out of Debt, and Live Prosperously" by Jerrold Mundis or "Your Money or Your Life" by Joe Dominguez. These and other self-help resources will help you to correct the problems that got you into these debts in the first place.

Celine Mettarod has been paying down her credit cards bit by bit for a couple of years. She predicts she will be completely out of debt within 3 years, including her mortgage. You can read more articles about debt consolidation at For Debt Consolidation


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Debt consolidation services - Things to watch out for with debt counseling companies
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