Debt Consolidation Companies: Questions to Ask When Choosing a Debt Consolidation
Company
You may have seen some of the advertisements for
debt consolidation companies:
One company promising a quick and painless
debt consolidation solution, while
another proudly touts itself as a
debt consolidation non-profit operator. Or
another
debt consolidation lender would boast national dominance in the
debt consolidation business, claiming to offer
debt consolidation San Diego,
debt consolidation San Antonio and
debt consolidation New York. If you believed some of the advertisements being
run by
debt consolidation companies, you might come to the conclusion that
debt consolidation companies hold the silver bullet that would slay all your
debt monsters. But the reality is that the
debt consolidation
industry attracts its share of unscrupulous
debt consolidation companies preying on unsuspecting
consumers.
Knowledge and vigilance are your primary weapons against falling victim to a fraudulent
debt consolidation lender. If you are considering a
debt consolidation firm
for your debt problems, you need to familiarize
yourself with the reputation of the
debt consolidation company, the
debt consolidation solution
it is offering and the fees that it charges for its
debt consolidation loan and related services. Whether you are searching for a
firm specializing in
debt consolidation San Diego,
debt consolidation San Antonio or
debt consolidation New York,
you must ask the right questions in order to arrive at an appropriate decision. The following
questions may help you choose the right
debt consolidation company that offers
the best
debt consolidation solution for your needs and circumstances.
What Type of Debt Consolidation Solution Does the Debt Consolidation Lender Offer?
A
debt consolidation lender may present you with different options for
consolidating debt. Some of these
debt consolidation strategies include
debt consolidation loans, home equity loans or lines of credit and balance
transfers to a zero percent credit card. Each
debt consolidation solution has its
own set of pros and cons, so you should inquire about these from the lender. Based on a thorough
analysis of your credit problem and financial standing, the lender should be able to propose a
debt consolidation solution that would be most financially viable to you.
What Fees Will the Debt Consolidation Firm Charge?
Apart from the one-time set-up fee, the
debt consolidation company may charge a
monthly fee for its services. Generally, this monthly fee should not be more than 10 percent of the
monthly installment that you will owe the
debt consolidation company to pay off
your
debt consolidation loan. Beware of any hidden charges and fees that the
debt consolidation lender might spring on you later. Have the
debt consolidation company list all the fees it will be charging you. Request a
free quote of how much your participation in the
debt consolidation program would
cost you.
In the advertising language of
debt consolidation non-profit is the oft-repeated
magic word. Too many consumers who are unfamiliar with the business of
debt consolidation non profit may suggest free or cheap assistance in
consolidating debt. This is not necessarily the case all the time. In fact, there are fraudulent
debt consolidation companies that claim nonprofit status but turn up a huge profit
by charging hefty service fees and transferring income to a for-profit entity. As payment for
providing services related to
debt consolidation non-profit, firms receive from the
creditors a so-called fair share distribution equivalent to 10% of the monthly debt payment.
How Legitimate is the Debt Consolidation Firm?
Any Tom, Dick and Harry can build a website that could make a fly-by-night operator look like a
legitimate
debt consolidation firm. These fraudulent
debt consolidation companies are not likely to disclose a physical address and
tend to offer vague answers to consumers'
debt consolidation questions. But a
legitimate web-based
debt consolidation service like
American Debt Resources,
Credit Card Consolidators and
National Legal Debt Centers discloses its physical address to the
public and is affiliated only with bona fide debt agencies specializing in debt management,
negotiation and consolidation. Make sure you're dealing with an honest-to-goodness
debt consolidation lender by checking with the Better Business Bureau. The BBB
may have some information about the
debt consolidation lender you are considering,
be it
debt consolidation New York,
debt consolidation San Antonio
or
debt consolidation San Diego. Ask the
debt consolidation firm
for references from satisfied customers. Friends or relatives who have used a
debt consolidation company can provide valuable feedback on that company.
How Long Does the Debt Consolidation Company Expect You to be on the Program?
You have the right to know how long it would take to pay off all your debts under the proposed
debt consolidation solution. Ask for a concrete payment timeline for each of your
credit card debts, so you'll know the progress of your
debt consolidation efforts.
Experts in
consolidating debt
suggest that for a
debt consolidation program to make economic sense, it should not take longer than
five years to complete. Remember that the longer the term of your
debt consolidation loan, the more you pay in accumulated interest.
For more information on Debt Counseling and Debt Consolidation, visit:
