If you are burdened with debt whether it's credit card debt, mortgage debt, or student loan debt, you might have considered using a debt consolidation company to help you get in charge of your finances, lower your monthly payment, and get back on track financially.
There are many misconceptions about debt consolidation companies. Below are some of the most commonly asked questions about them along with some answers.
What Are Debt Consolidation Companies?
Debt consolidation companies are companies that offer to pay off your existing debt and roll it into one new loan, making your monthly payments easier to manage. Debt consolidation companies do not eliminate your debt entirely. Some, if they are called a Debt Settlement Company, will negotiate with creditors on your behalf. These types of companies often charge fees for negotiating on your behalf, and it's important to do your research so you know the company you are working with is legitimate. It's also important to decide what you want to do with your debt, whether you want to settle because you are having trouble paying your loans or whether you can pay your debt but you just need monthly payments that are more manageable.
When Should You Use a Debt Consolidation Company?
The Federal Trade Commission recommends that when you have debt, the first step should be self-help. This means that before you contact a debt consolidation company, you should take the time to assess your finances, create a budget, cut your spending, and find ways to improve your income.
If, after a concerted effort, you still feel like you need the help of a debt consolidation company, you should seek one out that has high reviews.
How Do You Find a Trustworthy Debt Consolidation Company?
There are many ways to find a trustworthy debt consolidation company. Although there are many horror stories about people working with debt settlement companies in particular, with enough research, you can find companies that have helped millions of people with positive reviews.
Watch out for companies that give empty promises about settling large amounts of debt or doing it quickly. The most trustworthy companies should disclose that there are no guarantees of results. The most trustworthy companies will also disclose their fees upfront, so you know exactly what you have to pay them to take the time to consolidate your debt or negotiate with creditors on your behalf.
You can also check a company's rating with the Better Business Bureau or search reviews online to ensure they have a history of positive customer reviews. Finding a debt consolidation company should not be a quick process or one that you choose lightly. After all, they have the fate of your financial future in their hands, and you want to make sure to make as educated of a decision as possible when choosing a company to work with.
Again, you should take the time to work through a negative financial situation on your own first, but if you find that you are getting behind on payments or incurring late fees, finding a debt consolidation company to help lower your payments would be a wise next step as long as you carefully choose the one who will meet your needs and legitimately help you.