Picking A Debt Consolidation Company

Saturday, September 1st, 2007 at 2:45 pm

If you are in need of a company to aid you with debt consolidation, you should be very careful on which company you choose. Consolidating all your debt into one single loan is the first step to financial freedom.

There is a very large range of qualities you should look for in a company. Like every industry some companies are there to truly help and others are their to take advantage of you.

For example many debt consolidation & settlement companies sell leads. This is selling your information to other companies. If you pick a company that does this you will end up getting hammered with more unwanted calls to go along with the bill collector ones.

Lots of web based debt consolidation companies love selling leads. It’s what their business is based around.

They put on a front that they are a debt consolidation company, will collect your information and turn around and sell it to a 3rd party with out you knowing.

To steer clear of these companies read the disclaimers on their websites.

Another good way to avoid these companies is to go with your bank. I cannot stress enough that your bank or any bank is a great place to start.

A bank’s consolidation service will be way more honest than an e-based company’s.

With your bank you will know exactly what’s going on you with every step of the process.

Many banks will assign you a consultant that will walk you through everything and answer any question you may have.

Do not get trapped into a balloon loan! These loans are loans that you make small payments on for several years.

Up to 15 years in some cases and at the end of the loan period you will be required to pay off the loan in full if you still owe any money.

Getting locked in a loan like this will leave you carrying your debts around for many extra years.

Non profit does not necessarily mean the company is good and reputable. There are just as many shady non-profit companies as their is profit ones. Read up on non profile debt consolidation companies here.

Like I have stressed in previous guide entries check with the BBB before choosing a company.

If others have had experiences they regret it does not always mean you will. But a good rule of thumb is if the company has more than 10 complaints you probably want to pick a different one.

One last ling to consider…know the difference between debt settlement and debt consolidation.

Debt settlement also known as debt negotiation is usually the best bet for someone who is in serious amounts of debt.

A debt settlement company will contact all the companies you are in debt to, and will work out a deal.

Then the settlement firm will pay all your debts off. Now you have to pay the settlement company.

Debt consolidation on the other hand is where you get a loan to cover all your debts, and then you personally pay off each debt. You will then only have to pay off the loan, leaving you with one simple, easy to manage payment.