The Magical Ring Of Debt Consolidation Companies: Watch Out For The Slippery Side
Saurabh Jain
August 06, 2008
When debts are up to your eyeballs, it is very easy to get caught into the world of fantasy created by different debt consolidation companies. Most of them offer you easy fixes and scream things like "erase all your debts now", "debt relief is just a click away", and things like that. Such promises sound incredible and are quite alluring for those who are living in the quicksand of debts. However, it is very important for you to understand that you did not build such debts in a single day; hence you are not going to get out of them overnight. However, that does not mean that all such companies are unscrupulous. The right company can definitely help you with the right strategy to get out of the debt as quickly as possible. It is just that you need a service that you can rely on. So, watch out for those flying monkeys.
The Written Agreement or Contract
Just a phone conversation or an email communication is not enough to make a commitment with a debt management company. A written contract is a must. Hence, read the terms and conditions thoroughly. Sign up only if you find the terms in your favor. Do not hesitate to negotiate. It will not cost you anything but you might just gain a lot. Some debt consolidation companies may try to give "alluring" excuses for the absence of a written contract, but you do not have to get allured. If there is no written agreement, move on.
Use Your Third Eye While Dealing With Non-Profit Agencies
You need to be extra careful. Well, some companies may work on a no-profit no–loss basis. But, you cannot also ignore the fact that some companies are actually making a lot of profit under the "non-profit" label. They will try to justify their high amount of fee. You can listen to them but act only according to your own mind. Do a thorough comparison shopping of various debt consolidation companies to find out if you can get better rates or a better deal. It will not take you long to find legitimate companies that offer help for a low fee.
Ask For the Details - Is the Deal Transparent?
In most cases, you are supposed to make a single payment to the debt management company and the company then pays to your creditors on your behalf. The company must be transparent enough to give you exact details of how the payments are going to be used. If you get vague details, you must take it as an alter sign.
Check for the Complaints with the BBB
Before you make a commitment with a company, do not forget to check its reputation with the Better Business Bureau. Complaints are obvious for any company, but what I mean by complaints is "unresolved complaints". If the complaints have already been resolved, fine enough. Unresolved complaints are a red signal.
Always remember that the magic of debt management lies in making the right moves the right way and at the right time. So, be very careful while you are choosing the best debt consolidation program, from the different offers by these debt consolidation companies.
The Written Agreement or Contract
Just a phone conversation or an email communication is not enough to make a commitment with a debt management company. A written contract is a must. Hence, read the terms and conditions thoroughly. Sign up only if you find the terms in your favor. Do not hesitate to negotiate. It will not cost you anything but you might just gain a lot. Some debt consolidation companies may try to give "alluring" excuses for the absence of a written contract, but you do not have to get allured. If there is no written agreement, move on.
Use Your Third Eye While Dealing With Non-Profit Agencies
You need to be extra careful. Well, some companies may work on a no-profit no–loss basis. But, you cannot also ignore the fact that some companies are actually making a lot of profit under the "non-profit" label. They will try to justify their high amount of fee. You can listen to them but act only according to your own mind. Do a thorough comparison shopping of various debt consolidation companies to find out if you can get better rates or a better deal. It will not take you long to find legitimate companies that offer help for a low fee.
Ask For the Details - Is the Deal Transparent?
In most cases, you are supposed to make a single payment to the debt management company and the company then pays to your creditors on your behalf. The company must be transparent enough to give you exact details of how the payments are going to be used. If you get vague details, you must take it as an alter sign.
Check for the Complaints with the BBB
Before you make a commitment with a company, do not forget to check its reputation with the Better Business Bureau. Complaints are obvious for any company, but what I mean by complaints is "unresolved complaints". If the complaints have already been resolved, fine enough. Unresolved complaints are a red signal.
Always remember that the magic of debt management lies in making the right moves the right way and at the right time. So, be very careful while you are choosing the best debt consolidation program, from the different offers by these debt consolidation companies.
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