Debt Consolidation Service Providers: How to Choose the Right One
As bills and headaches pile up, it’s easy to feel cornered when it comes to credit card debt. This is when it’s most important, though, to not let your sense of desperation overrun your judgment. Approach the situation with a clear head and make decisions carefully, or you could wind up in a situation that’s just as bad (just in a different way).
In this section we’ll talk about:
- The role of debt counseling or debt consolidation companies
- How to find a good debt consolidation company
- What to look for and expect
The Role of Debt Counseling/Debt Consolidation Companies
Any debt consolidation service, regardless of which route you decide to take, should be the intermediary between you and the credit card people. That should put a stop to the harassing collection calls and never-ending bills. They should also sit down with you and help map out your monthly expenses, and come up with a schedule of what you can afford to pay. If it’s a loan setup, they’ll help you figure out what sort of monthly payment you can take on, and how long to spread out the length of the note.
The better, more reputable companies will help you adjust your spending habits so you can hopefully head off any future trouble with debt. This is a step that cannot be stressed enough, as thousands of Americans have become accustomed to living beyond their means and not facing up to the consequences down the line.
How to Find a Good Debt Consolidation Company
A logical first step is to look in your local Yellow Pages and find a nonprofit Consumer Credit Counseling Service (CCCS). Oftentimes they can help with your spending habits and can make some of the calls for you without having to enter into an agreement with a debt consolidation service. If your problems run deeper than that, they can help refer you to a good, reputable debt consolidation company in town (keeping it local, if at all possible, is a good idea).
You’ll find hundreds of listings for debt consolidation companies on the Internet; some are above-board and some aren’t. Do your homework carefully and always, always check with the BBB’s listings on a company. If you find one particular company that sounds promising, do a Google search for its name and try to find feedback from consumers on their performance and practices.
What to Look For and Expect
Here a few things to look for on your first meeting for debt counseling:
- Does the counselor take less than 30 minutes to discuss the program with you?
- Do they require a month’s payment as an initiation fee?
- Do they discourage you from reading the contract before signing?
- Do they ask for “voluntary” contributions?
These are all warning signs; if so, take your business elsewhere. Check out their fee schedule carefully, trust your gut and don’t be stampeded into anything.
The paradox of the credit crisis, circa 2009, is that many companies are now a lot more willing to negotiate than they were a few years ago. Not to mention that Obama’s credit card industry regulations are currently in the works; one plan on the table will curb aggressive marketing to those under 21, requiring an adult cosigner on credit card contracts.
This doesn’t exactly give you the upper hand, but before you even start shopping around for a debt consolidation service, take some time to get on the phone with the companies’ billing departments. Explain your situation and your ability to pay, and they may well be willing to cut a deal with you over the phone. It’s not guaranteed, but it can’t hurt to try, and it may keep you from going to a fly-by-night debt consolidation company (or worse, bankruptcy court).