If you’re drowning in a sea of credit card debt, it may seem like there aren’t many options other than bankruptcy, especially if your bills are already several months past due and you are getting calls from the collection companies. However, you do have an option to negotiate down the amount of debt that you pay by using a debt consolidation company. These companies know how to negotiate credit card debt and will bring their know-how to the table to help you out of your financial troubles. The only problem is that while there are many great companies that do this, there are also several that take advantage of distressed consumers. Here’s what to look out for.
First, you should usually always find out if a company if for profit or not for profit. In most cases, it will be better to go with a not for profit company. Not for profits were setup to help consumers and will only take fees from the negotiations that they need to cover their administration costs. For profit companies, on the other hand, are aiming to make the biggest profit possible and may charge much higher rates. While this isn’t a perfect metric, it’s a good starting point to sort out the companies.
Next, while the main goal of these companies is to reduce the amount of debt that you’re paying and not fix bad credit, talk to them before you sign a contract on what the effects will be on your credit history. The better companies will make an attempt to keep the negotiation off of your credit history and have the credit card companies place “paid in full” on your account. Companies that are only concerned with their payments might not take this extra step.
Make sure you take time to research and find out about the best debt consolidation companies. Look for reviews online and talk to representatives. You might end up saving a lot of money.
