How do I Choose the Best Debt Consolidator?

Marty Paule

In choosing the best debt consolidator, be aware that there are unscrupulous companies who charge large fees to perform questionable services that may actually do further damage to your credit rating. There are ways to distinguish legitimate debt consolidation companies from the unethical firms. Investigate the reputation of the debt consolidator, and be skeptical of any who make claims that seem too good to be true. Look for a consolidator who seeks to examine your financial situation thoroughly and who can develop a plan to help stabilize your finances for the future.

Some debt consolidators have damaged their clients' credit histories through poor negotiations, or by failing to make payments in a timely manner.
Some debt consolidators have damaged their clients' credit histories through poor negotiations, or by failing to make payments in a timely manner.

The best debt consolidator is likely to be a non-profit company founded with the intent of helping consumers. Such organizations' services are often low-cost or even free. There are honest for-profit consolidators as well, although their services might be more expensive. Be cautious in dealing with firms that promise to improve your credit score within a very short time or make other commitments that seem too good to be true. Check the organization's reputation with the Better Business Bureau (BBB) or other business rating service and by reading reviews from fellow consumers.

In most situations, the best debt consolidator will not use junk email or spamming techniques to get your business. They will interview you thoroughly to establish exactly what your debts total and determine what your repayment capabilities are. A program that includes counseling to stabilize your finances, create a budget you can live with, and improve your creditworthiness beyond the initial debt consolidation phase is indicative that you are dealing with a good debt consolidator.

Usually the best debt consolidator will have been in business for a substantial time and will have numerous success stories and testimonials from customers that can be verified. Ask for references and check if the consolidator has received commendations from the financial industry. Be extremely cautious of companies that ask for up-front fees or personal data before discussing your situation. Be especially wary of consolidators who partner with lenders offering consolidation loans.

Once the company has created a proposed consolidation plan, be sure to check the numbers closely to ensure that any fees being charged are reasonable and in line with industry standards. Review the consolidator's processes for negotiating with and paying your creditors. Some debt consolidators and counselors have been charged with damaging their clients' credit histories further through poor negotiation skills or by failing to remit payments in a timely manner. Be certain that all the details of the consolidation plan are clearly set forth in writing; verbal promises are often difficult to enforce.

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