Debt consolidation can be a powerful tool for getting someone out of debt sooner and saving them thousands of dollars in debt, as long as the terms are right for the client. The best debt consolidation companies all have similar characteristics that make them stand out in an industry plagued by controversy and sub-par service providers.
Choosing the right debt consolidation company can mean the difference between getting out of debt or sinking further into it. Below is a guide that identifies which characteristics the best consolidation companies have in common.
The Best Debt Consolidation Companies Have Minimal Complaints
In 2010, there were over 6,000 complaints lodged against debt relief companies with the Better Business Bureau. Before signing up for a debt relief plan, look up the company at the BBB’s website and check to see how many complaints have been filed against them. Read about the business on “Consumer Reports” or other review websites.
The Best Debt Consolidation Companies Follow FTC Regulations
The Federal Trade Commission responded to the thousands of complaints about up big up-front fees by banning them from debt relief companies. Now they can only charge fees after a written agreement is established between the consumer and the creditor, debt has been successfully reduced, and the consumer makes a payment to the creditor. Check out the other rules (link here) in detail.
Be aware that reports suggest most debt relief companies are resisting the regulations, looking for loopholes or ways around them altogether (link here). Some organizations are officially in agreement with the FTC and have made that information public. Non-profits like the National Foundation for Credit Counseling are a reliable source in total compliance with the FTC.
The Best Debt Consolidation Companies Under-Promise and Over-Deliver
When it comes to paying creditors, the individual consumer is at risk, not the company managing their debt for them. If the company makes a late payment, or misses one entirely, the individual suffers while the business holds the money longer as a result.
Often, customers will pay fees to a debt settlement company that promises to cut their debt in half and cut 10 years off their payments. Then after negotiations fall through with the consumer’s creditors, the business will tell the customer the bad news. Now the client has higher interest rates, has wasted money on fees, and has a lower credit score.
That’s why it’s critical to work with a company that educates customers with facts based on a real statistics, and doesn’t make grand claims to cut a customer’s debt by 70% without saying how likely it is to happen for them.
The Best Debt Consolidation Companies Have High Success Rates
Ask for their actual success rates on negotiation if they seem too good to be true. Also, find out how many people they have actually helped get out of debt over the last year. Research the company online to see if clients have complained about their services, customer support, or the results of the debt consolidation.
The Best Debt Consolidation Companies Offer a Variety of Services
Your finances are unique. Given that fact why would anyone trust their financial well-being to a debt consolidation company that offers one standard type of debt relief to all of their customers. The best debt consolidation companies differentiate themselves by offering a variety of debt relief options including, debt management plans, debt settlement plans, credit counseling, as well as general guidance on budgeting and money management.
Is debt consolidation the right financial move for you? Find out which financial situations debt consolidation works best for and what options are available.