When you begin investigating businesses that offer debt consolidation services (also known as a debt management program) it is imperative that you do your homework first to ensure that you are working with a
reliable and honest company. First, contact the Better Business Bureau to see if the company is listed with them, and if they have any complaints against them. Each state has different rules about these types of companies, so also check with your state’s consumer protection offices. Ask if they have received any complaints about the agency. Also, because state rules vary, you may want to consider using a local company rather than a national one, as your state may have more stringent rules.
Also keep in mind that you may be able to perform some of the services yourself. If you like the idea of one convenient payment per month, or not having to contact your creditors yourself, that’s fine. Just make sure you investigate the service provider first. However, remember what the service provider does, and consider trying it yourself. If successful, you will save yourself the monthly fee that goes to the consolidation company.
One of the primary services they provide is contacting your creditors on your behalf and asking to have the fees waived and the interest lowered. They inform your creditors that you are enrolling in the program and will be paying on loan. You, too, can try this tactic. Creditors will be happy to learn that you don’t plan on defaulting on the loan, so they may be willing to work with you. This will probably require that you close the account and continue to pay on the balance, but that’s a small price to pay.
If you prefer to use a service, choose carefully and use your best judgment. When researching companies, for example, remember that just because a company is non-profit, does not necessarily make it better. Many non-profit agencies require a “voluntary” fee, which you must pay in order to receive services. Also keep in mind that some questionable agencies have professional looking websites. Looks aren’t everything! You need to dig deeper before moving forward. Do your research, ask a lot of questions, and carefully read the terms and conditions before you sign anything.