Debt Consolidation Companies Part II: What to Look For

So you review your budget, calculate those sky-high interest rates, and determine that debt consolidation could save you a lot of money, stress, and time.

Most credit counselors will truly represent your best interests and treat you as importantly as you should be treated. With recent bankruptcy law changes, tens of thousands of new clients will utilize debt counseling, and many new services may be offered to you.

Choosing among all of the types of debt consolidation services available, might give you the sensation that you are sinking in an ocean of advertising. There are lawyers, credit counselors, debt counseling, and debt consolidation companies. Mixed in with these legitimate service-providers are also a dash of people promising 125% loans and even curbside loan companies (cash advances and pay day loans).

When choosing your company, ask for client testimonials, professional credentials, and business associations (such as Better Business or Square Trade). Is the company of interest able to give you real names of real people? Some experts suggest that you use only counselors you can meet in person but this not always realistic, especially for people in rural areas.

Establishing your own comfort in the debt counseling process is the most important factor. For example, some people do not feel comfortable sitting face-to-face with another person to discuss what they may consider embarrassing. The internet can be used to screen and contact counselors of debt managers, but it is crucial that you have another method besides the internet to communicate with your counselor.

Because there are so many options for debt consolidation, there are also many debt experts. Having expertise is good, but - of course - most experts think their option is the best. Consumers need to ensure that whichever services they utilize are tailored to their personal needs, debts, and assets... Do not allow yourself to be forced into cookie cutter answers provided by a company. A company deserving of your business should be able to answer all of the following:

• Will you help me develop a plan for avoiding problems in the future?
• What are your fees?
• What if I can’t afford to pay your fees?
• What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
• What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure?
• How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a ‘contribution’ to your organization?
• How do you decide what plans are best for my situation?

Debt consolidation is an agreement you are making, not with your counselor or debt expert, but with yourself or your family. By lowering your interest rates and reaping significant savings, you are agreeing not to use your money to increase debt for nonessential purchases. A good counseling agency or debt management company knows this, and almost immediately will begin to provide you with new skills for solving your debt management problems.


Company fees can raise the cost of consolidation, so be sure that you are not borrowing a dime to get a nickel. Shop and compare among companies. Debt counseling should not be just a quick fix, but also should really educate you about the cost of debt.

The point of credit counseling is to save money, so be certain that any company you consider provides you with a complete list of fees. Before you sign up, confirm that the money you will be asked to spend is not more than the money you intend to save through counseling. Do not accept vague answers to your questions: if you are not given a straightforward answer, tell someone that you do not understand and would like more information.

Consider the consequences of stretching your debt out for a longer period of time. If you can pay off a debt with high interest without borrowing, then that is almost always your best course of action. If you are using your home as collateral, however, then you certainly are increasing your risk.

Debt consolidation works first as debt elimination and eventually as debt self-control. In looking for the right company, make sure that the company is looking out for you.

When Debt Consolidation Part III: What to Expect