Debt Consolidation Companies: Common Pitfalls to Avoid

It's difficult not to notice the incredible growth that there has been in companies offering debt consolidation programs and solutions over the past few years. At first, debt consolidation companies were some of the biggest advertisers on the internet and there are now more loan consolidation TV commercials than we've ever seen before. However, a great number of these debt consolidation companies are now being sued by numerous attorney generals, the IRS, and the FTC over their supposed ‘non-profit’ status.
One of the worst debt consolidation companies has actually had a federal lawsuit filed against it and the FTC and five individual states have filed separate lawsuits against the company. This company declared Chapter 11 bankruptcy but the reality is that they have not gone out of business themselves, they have simply changed into so many other companies that they are most likely around in some form.
Interestingly, many companies do not call themselves ‘debt consolidation companies’ anymore because of the bad press that all of the legal action against this first company generated. You may hear of ‘debt negotiation’ companies or ‘debt settlement’ companies who are basically ‘debt consolidation companies’ who are using illegal tactics and should be avoided.
You can check out any debt consolidation companies, or any other company for that matter, with your local consumer protection agency and the Better Business Bureau in the company's location. Be aware that debt consolidation companies with a good rating may mean absolutely nothing. In fact, over 75% of the complaints received by the Better Business Bureau do not count against the company's rating if the complaint is considered resolved. The Better Business Bureau has no authority to investigate complaints against debt consolidation companies, nor resolve them.
One particular word of advice is to avoid any debt consolidation companies who have a registered address in Maryland or Florida. This is because these two states do not regulate debt consolidation companies. There are so many debt consolidation companies available that if you really feel that this is the best course of action for you then avoiding those in Maryland or Florida should be simple and will save you the worry of dealing with a disreputable organisation.
You can find a number of websites that offer a customer review section for debt consolidation companies. This is worth checking out to see if customers of any of the debt consolidation companies that you are considering signing up with have had problems dealing with them in the past.

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Debt Consolidation Companies – Why Pay When You can Do-It-Yourself?

You are already in debts and the last thing you figure is to pay for the service of debt consolidation companies or programs that will only further increase your debts.
You are not wrong by thinking in that manner. “You DO need to pay for the service of debt consolidation.” But you are not completely right either. “So why pay that extra amount of money that can use to repay your debts instead?”
The ultimate objective of debtors is to clear their debts with the shortest amount of time and effort. And the reason why people pay for debt consolidation services is that they can help them achieve their debt clearing objective – Simple!
Why is that so??
Debt consolidation companies have existing working relationships with many of the creditors nationwide. Most of these creditors are therefore more willing to work with them to help their clients to clear their debts problems.
Credit card companies also prefer to work with specialized debt consolidation companies because it free up their burden of debt collection, drafting repayment agreements and terms paper work.
It is not surprising to find that debt consolidation companies can most often get their clients better repayment terms like interest rate reductions, elimination of late fees penalties, and a lower monthly payment.
On the monetary aspect, debt consolidation services are worthwhile if the gains on the debt repayment package are more the cost of their services.
On the other hand, there are also some other advantages to use debt consolidation services.
You do not need to give up all your credit cards, and may include only those credit cards that you wish to consolidate. And the most important part is that you will get personal financial budgeting advice and guide to help you plan your monthly budget.
All in all, a person who uses the service of debt consolidation companies will most often get out of debt years sooner than those who try on their own.

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