If you have been dicing with debt over the last few years you will no doubt be feeling a little down. Sometimes it can feel that the whole world is against you. After all, you just want to get on with your life.
It is at this point, when you are feeling down, that you can become at risk to ‘too good to be true’ claims from loan providers. They hit you with claims that they can help you pay off debt quicker or reduce what you owe. You cannot be blamed for thinking “wow, I need to get myself one of those”.
However, over time, people have fallen foul of this desperate sales technique from dishonest loan providers. Hundreds, if not thousands, of people have suffered. They do not get to pay debt off quicker, nor do they get a reduction on what they owe. These people have been scammed.
Before you launch into picking up the phone or accessing a debt consolidation company’s website, you need to be aware of everything. That starts with understanding what debt consolidation is.
What Is Debt Consolidation?
Debt consolidation comes in a variety of different forms and is supplied by an even bigger variety of companies. There are three types of debt companies, and you need to familiarize yourself with each of them; debt consolidation companies, debt settlement companies and debt management companies.
Debt consolidation companies work by purchasing your existing debt. They then set up a new repayment agreement with them so you can pay back what you owe. In simple terms, it allows you to go from multiple creditors with multiple payments that are set to just one creditor (debt consolidation company) and one regular monthly payment.
Working with a debt consolidation company in this way may see you paying a lower rate of interest, then the combined average and total of your existing debts. This should mean that you repay less as most of your regular debt payments will be heavily made up of interest charges.
This is where you work with a third party to try and renegotiate your current financial debt arrangements. They will liaise with your current creditors and try and thrash out a new balance to repay.
Debt management works in a very similar way to debt settlement. A third party will try and negotiate with your current creditors to try and establish lower interest rates and subsequent payments.
You may be swayed by working with a debt settlement or debt management company, yet very few of these companies are successful. Many people who try and work with them simply do not get the deal that they are after and most of these debt settlement and debt management companies will charge you for their time.
If you do choose to investigate debt settlement and debt management companies further, try and seek impartial and independent advice before you get into bed with companies like this.
Finding a reputable debt consolidation company can be just as difficult. Luckily, there is a few hints and tips that you can use to help you find the right debt consolidation company for you.
How You Can Find a Reputable Debt Consolidation Company
You may have to do some research before you commit yourself to dealing with a debt consolidation company. Some debt consolidation lenders are really great, and a pleasure to deal with. Others have proved that they can destroy people, make their financial situation worse and cannot be held to account over their actions.
It is strongly recommended that you check through this list, and apply these hints when you start looking out for a debt consolidation company to work with.
Check Out the Better Business Bureau
The Better Business Bureau (BBB) is a website that is easily accessed and it can tell you if a debt consolidation company is registered with them. Companies that register on the BBB get rated by their customers. Some companies may not have a review or rating against them, but it is a good place to start.
Are They Registered?
Are your chosen debt consolidation company registered with the Association of Independent Consumer Credit Counseling Agencies or The National Foundation of Credit Counseling?
It is worth checking their registers, as any reputable debt consolidation company will be registered with one or both of these agencies. If you can find your debt consolidation company on their database, you can see if there is any feedback that has been given on that company.
Have You Considered Charity?
There are some great non-profit credit or debt consolidation agencies that could help you. This, of course, does not guarantee that the company is reputable, but you can always use the first couple of tips to check out their credentials.
One thing that you must be aware of, if you go down the non-profit route, is that they may charge you for using their service. After all, they are a charity and need to charge to keep their operations going.
Use the Internet
One of the best ways to check to see if a debt consolidation company is reputable is to search for their company online.
The internet is full of amazing websites and forums, where you can find lots of relevant information about your chosen debt consolidation company. You will be able to find anything; from customer reviews, peoples experiences with the company, news regarding the debt consolidation company and much more.
Speak To Friends and Family
This may not be an option for everyone, but friends and family who may have been in a similar situation before, may be able to shed some very useful information on debt consolidation companies.
Even if your friends and family cannot help directly, they may be able to suggest that you speak to other people or to other organisation that may be able to help.
However you decide to clear your debt, you must always ensure that you are dealing with a reputable company that have your interests in-hand.