3 Key Considerations When Using Debt Consolidation Services Online

Most of us are swamped with bills like credit cards and auto loans, so we're turning to debt consolidation services to help us regain control of our finances. It's a good idea since some debt consolidation services can also help you lower your interest rates and monthly payments. But there are some unscrupulous folks out there, and that means you need to watch out for scammers when you're looking for a Debt Consolidation Service online. Here are three warning signs of a disreputable company:

Large Outrageous Fees

Some companies charge $100 just for reviewing your account, often disguised as a "credit analysis." Others offer an "educational program" consisting of mostly free forms, letters, and information gathered from Internet websites. The cost of this "education"? It can be as high as $1,500! Be wary of any company that pushes for up-front payment before you receive any type of service or materials.

Unbelievable Promises

"Your monthly payment will be half of what you're currently paying!"

"We'll get your interest rate slashed to zero percent!"

"You'll be paying less in just two weeks!"

These types of exaggerated promises are designed to lure you in, and they're rarely true. No one can work miracles, and they certainly can't work them in just two weeks. Expect it to take at least a month--and probably longer--before you see the effects of debt consolidation on your finances.

They Make First Contact

Any company that sends out SPAM, cold calls your home, or sends you junk mail is fishing for a fee. Chances are they only want your money, and once they get it they'll offer very little in terms of services. Most reputable companies will wait for you to contact them.

You can always double-check a Debt Counseling Service with the Better Business Bureau to see if any complaints have been filed against the company. You might also consider asking family and friends if they have any experience with the service.

Additionally, it's important to remember that debt consolidation is not a one-size-fits-all solution. While it can be a helpful tool for some individuals, it may not be the best option for everyone. It's important to weigh the pros and cons and consider other alternatives before making a decision.

One alternative to debt consolidation is a debt management plan. This involves working with a nonprofit credit counseling agency to create a plan to pay off your debts over time. The agency will negotiate with your creditors to lower your interest rates and monthly payments, and you'll make one monthly payment to the agency, which will then distribute the funds to your creditors. This can be a good option for individuals who want to pay off their debts but don't want to take out a new loan.

Another alternative is debt settlement. This involves negotiating with your creditors to settle your debts for less than what you owe. While this can be a good option for individuals with a lot of debt, it can also be risky. Debt settlement companies often charge high fees and there's no guarantee that your creditors will agree to settle for less than what you owe.

You Can Settle Your Own Debt! I have written an ebook and workbook discussing how to settle your debt on your own. Feel free to download my FREE guide on negotiating a debt settlement to get you started.

Regardless of which option you choose, it's important to do your research and choose a reputable company. Look for a company that's been in business for a while and has a good reputation. Check their reviews online and ask for references. Always read the fine print before signing any agreements.