According to the Federal Reserve Statistical Release dated August 7, 2009, the outstanding consumer debt just went a little over $2.485 trillion dollars as of June, 2009. With that overwhelmingly amount to think about, it is no longer a big surprise why there are a lot of U.S. citizens who look for help when it comes to their own debt management and are constantly on the lookout for the best consolidation company that would basically combine all of their student loans, credit card debts, home equity and other debts into a singular loan.
The first question for those who are not in the know just yet is why do people prefer to turn to debt consolidation companies? Well for one thing, people with debts would no longer need to pay large amounts of money because of escalated interest rates on let’s say for example, a credit card debt. Also, borrowers need not to worry about juggling multiple accounts and make several payments to many different creditors. And the best part by far is that by consolidating all their debt into one account, creditors stop bugging them about payments. But of course all this would only work when a person is dealing with the best debt consolidation company that puts the borrower’s interests first before anything else.
Beware, however, of those consolidation companies who promise ‘quick fixes’ for consumer debt and assure you of really low monthly payments. It is perfectly understandable, for a borrower who is stressed out, over spent and plagued with debtor’s prison thoughts to jump into these promises by scam artists who for the most part would ask for a certain amount of fee before a loan is approved and later on raise the interest rates to such unmanageable amounts. Worse still, there are scammers who use the borrowers’ personal and financial information which they got from their so called ‘interviews’ and use it to commit identity theft. It is a good thing however that on March 30, 2005 the FTC or Federal Trade Commission sent a press release with the list of several debt consolidation companies that borrowers seeking help should avoid. Also, they sent out a list of what to look out for so as to avoid scammers:
* Don’t believe debt consolidation companies that give you a guarantee of removing negative information from your credit report that ‘fix’ your credit standing instantly.
* Beware of debt consolidation companies that require you to pay them a monthly fee. Monthly payments should go to your creditors not to the debt consolidation company.
* You are being charged a high monthly service fee.
* Borrowers are promised by the company of getting rid of unsecured debts.
But of course, there are companies that put the borrower’s best interest in mind. Listed below are some of the things a borrower should put in heavy consideration if the borrower wants to be sure that he or she will be dealing with the best debt consolidation company there is:
* The user ratings for credit counselling services are either ‘very good’ or ‘excellent’.
* The company’s Better Business Bureau’s ratings are A or higher.
* There are professional advisers available for the borrowers as well as self help tools.
* The company offers budget planning as well as e-mail and telephone support services
* And most importantly, offer debt management service with fees below $50 each month.