Does Debt Consolidation Work?
What Is Debt Consolidation?
Many consumers want to know does debt consolidation work. The question is an important one given the number of studies which show consumer debt continues on the increase and more and more consumers in the United States are falling into financial distress. It is no surprise that the number of companies offering debt consolidation services has skyrocketed. But do such services work? Do they deliver on the promises they make?
Let The Consumer Beware
The simple answer is it depends on which company you investigate. There are a number of so-called debt counseling and debt consolidation companies which are no more than fly-by-night outfits which may not even have a listed telephone number or stable address. There are other companies which take consumers’ money and leave them worst off.
Valid, Valuable Options Are Out There
Despite these abuses, there are some debt consolidation companies which do work and deliver on their promises. These companies work by gathering all of your bills together and then negotiating settlements with your creditors to pay less than you owe in monthly payments which usually take from one to five years to get you debt free. You send one payment each month to the company and it disburses the money to your creditors. Typically, when all goes as planned, you end up paying as little as 40 percent of the amount you owe on your debts. So how do you tell whether the company you are considering will deliver on its promises?
Risks vs Rewards
First, be aware that even if you take every precaution there is no guarantee you will not be burned or that the company you select will deliver on its promises. Still, if you are in debt, you should consider debt consolidation. The best strategy is to take a financial management class which are offered by your local government or a not-for-profit organization in your area. These services will provide you with a list of reputable companies.
Do Your Research
Make sure the company you select is a member of the Better Business Bureau and check with the Bureau to see whether there are pending complaints against the company. Check also with your local consumer protection agency to see if it has information on the prospective company.
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