Spotting A Good Debt Consolidation Company
People in debt are often desperate, and Debt Consolidation is a complicated subject. This means that there are companies out there that thrive on taking advantage of people down on their luck, raking in money for vague or even non-existent services. Don’t be a victim. Learn the signs to tell a good debt consolidation company from a bad one, and you’ll be in safe hands.
For instance, don’t be lulled into a sense of false security by a Debt Consolidation company that proudly shows off its non-profit status. While non-profit sounds good, in reality the only difference between a non-profit and a for-profit company is how they do their taxes. Some shockingly large fraudulent companies that victimize debtors work under non-profit status. At the same time, though, there are good non-profit companies out there. Some of them are subsidized by creditors to keep costs low for their customers. Companies that specifically market to people with bad credit histories often function in this fashion.
This is not to say that all non-profit Debt Consolidation companies are fraudulant, many of them contact your creditors and pay them a lump sum in order to significantly lower the fees passed onto you. These legitamate companies will work with people with poor credit ratings and help[ to substancially lower their debt.
For-profit companies that are true to their advertizements lean toward customers who still maintain a good/fair credit rating, but find themselves consumed by their current financial status. Both non-profit and for-profit companies that are legitamate facilitate a reduction in interest rates, ease of monthly payments, and provide similare service rates to the consumer.
One of the best ways to establish if a debt consolidation company is credible is to request a monthly payment quote. For instance, you can provide them with information on your creditor’s name, account balances and interest rates. Once you get their quote, you can compare it with payment quotes from other companies. All the quotes should have very little difference since your creditor will give a similar interest rate to all the companies. If any company should have a very low quote, take it as a sign of fraudulent activity.
The credibility of a company can also be measured by the services they provide. Since debt consolidation is a continuous process with constant communication between the consolidation company and the creditors in order to get lowered rates, close accounts and remove late charges, the debt consolidation company should provide you with all these information. Most fraudulent companies are not likely to provide information on their services.
Be very wary about companies 0ffering things like debt settlement or aid with bankruptcy, too. If they were doing a good job of debt consolidation, you wouldn’t need those kinds of services to begin with. With these red flags to steer you away from bad choices, you can easily find a good company that will do the right thing for you as a customer. A little effort now will save you a lot of trouble later on.
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