Debt Consolidation Companies – All That You Need To Know

Most debtors, who opt for debt consolidation to get out of debt, require the services of a debt consolidation company at some point of time – to garner financial and legal guidance. Debt consolidation companies provide professional finance services thereby clearing the way for your financial freedom.


How does a debt consolidation company function?

Debt consolidation companies offer consolidation services through professionally competent financial counselors. These counselors take stock of a debtor’s finances, expenditures, debts, liabilities etc. and after careful analysis and discussions with the debtor, suggest consolidation programs that are customized to meet the needs of every debtor. The debtor is required to follow the proposed program over a period of time and work in tandem with the counselors to kick away the debts.

The counselors also roll out finance and debt management strategies to the debtors to resurrect their financial portfolio.

What services do debt consolidation companies offer?

1. Negotiations and loans: Debt consolidation companies negotiate with each of your creditors one-on-one and negotiate on lower interest rates, subdued fees and reduced charges. After negotiations, a debt consolidation company shall offer you a single loan to consummate the negotiated debts and dues. Your dues are cleared using this single loan and what remains is a single consolidated loan to be cleared off.

Most consolidation loans are offered at significantly lower rate, which means that you end up paying a lower amount than what would have been paid for unconsolidated loans. Remember that debt consolidation applies to unsecured debts and consolidation loans are secured loans i.e. require collateral.

2. Settlement: Some debt consolidation agencies may carry negotiations to a level where they settle for a fixed amount with your creditors which is significantly lower than the principal amount. This “settled” amount is then paid off either at one go or through fixed monthly installments.

3. Credit card debt consolidation companies consolidate credit card debts by allowing for credit card balance transfers. These companies allow credit card users to transfer the balances on all their credit cards on to a single credit card. These transfers are generally charged minimally or sometimes even free of cost and offer significantly low rate of interest on the new credit card.

By shifting all balances on to a single credit card, you not only save some money by avoiding interests on individual balances, but also do away with the hassle of making payments against each balance per month. However, there might be a catch involved here – the lower rate of interest on the new credit card might be for a certain time-period only. Enquire about such rates and timeframes before you go ahead with the balance transfers.

Free debt consolidation companies

There are certain debt consolidation companies that follow a non-profit order of business. They offer similar services as commercial debt consolidation companies but are a comfort to your pocket on account of their non-profit agenda.

Enrolling with a non-profit debt consolidation company however does not necessarily imply that you won’t be charged at all. There may be certain enrolling and program fees, but these are substantially lower than the fees charged by commercial debt consolidation companies. Dig out such details extensively before associating with such companies.

With the possibility of counterfeits lurking around to tap in anxious debtors, it is best to run a few checks on the company’s credentials and claims of being “non-profit”. An approved non-profit company should reproduce a “non-profit certificate” issued by the government. Also run a countercheck of the same with the Better Business Bureau before signing up with a free debt consolidation company.

Best debt consolidation companies

There are a plethora of debt consolidation companies doing the rounds and offering sumptuous schemes to get you out of debts. It is only fair to pick out the “best” from the “rest” so as to avoid biting the dust. A good debt consolidation company can be tracked down by following the guidelines as listed below:

1. Zero in on debt consolidation companies with a proven track record and long years in their line of business.

2. Run an intensive check on the company’s background and financial status.

3. Check up with the Better Business Bureau and the National Foundation for Credit Counseling (NFCC) to verify the credentials of the company.

4. Browse extensively and enquire about the debt consolidation agency through friends, relatives and acquaintances.

5. Watch out for customer experiences about fees, billing discrepancies etc.

6. Lastly, scrutinize the terms of service thoroughly before signing on the dotted line.

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4 thoughts on “Debt Consolidation Companies – All That You Need To Know”

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