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How To Find the Right Debt Consolidation Company
   

If you are either drowning in debt, or realizing that you are awfully close to falling behind in your bills, then a debt consolidation company may have the answers for you. It is important to remember that debt consolidation is not the same as a debt consolidation loan. The latter usually refers to an unsecured loan from a bank or other lender. You receive the funds from your lender, and in turn pay off your debts. In the end, you only owe your new lender for the loan.

A debt consolidation company, on the other hand, will not offer you a loan. Instead the company will work with your unsecured lenders, such as credit card companies, to renegotiate the terms of your repayment. Very often this will result in a reduced interest, and also a reduction in fees – especially if you are already behind on your payments and have incurred late payment fees. While the debt consolidation company takes over the aspect of negotiating with your creditors, you will make one monthly payment to the company, which will then disburse the funds to the individual lenders.

Unfortunately, there are some companies out there who are in business for themselves, and their goal is not to help you out of your debt, but to help themselves to every penny they can squeeze out of you. For this reason it is advisable to shop around for debt consolidation companies, and compare the things they will do for you. Here is a helpful guide to finding the right debt consolidation company for you:

When you are shopping around on the Internet for debt consolidation companies, you should stay away from websites that do not give you a full understanding of the process before asking you to provide them with personal information, such as social security numbers, credit card numbers and other items.

The consolidation company of your choice should take the legwork out of the process for you. In other words, a company representative should be assigned to your particular case who will make the phone calls to your creditors for you, and whom you can call with questions or for a status report.

The company should offer counseling, newsletters, or other material that will help you stay on the right track and prevent you from slipping back into bad habits. Some companies actually offer web seminars to their clients for little or no fees to help them stay on track.

Beware of companies that promise you to repair your credit. This is not possible since the only thing that will fix damaged credit is the responsible use thereof. In other words, if you have late payments on your record, they will most likely not get expunged, but will be followed by positive notations once you make your payments on time. Similarly, stay on companies that promise you that every creditor will lower their rates. There are actually some creditors out there that will not work with a debt consolidation company at all, and while you can still pay them through the company, you will not see any change in payments due, interest rates, or fees.

Ideally, you should be out of debt within about 48 months. If your debt management company quotes you are significantly higher timeframe, it is important to find out why.

It is important to not that some companies may require you to cut up your cards, and promise not to apply for any more credit while you are participating in their program.

Beware a company that asks you for high up-front fees “to get the ball rolling” or to cover administrative costs. Similarly, do not send in any money to the company until you have been notified that all your creditors have accepted the new terms of your payoff. Instead, continue to make minimum monthly payments to your creditors.

As you can see, not all debt consolidation companies are created equal. As a matter of fact, while there are a good many of them out there that will do the right thing and who are extremely ethical, you also need to be aware that a few of them as less than ethical. Do not despair! With a little bit of research and some questions asked to the company, you will be able to reduce that pile of bills that seems to have built up overnight.

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by SolveYourProblem.com : 2007

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