How to Choose a Top Debt Consolidation Company

If you're struggling to pay down outstanding debt, or you're hoping to reduce your interest rates, consolidating your debts might be the right choice. Debt consolidation companies help consumers to combine their debts into a single monthly payment at a lower interest rate. You make one payment to the company, which then distributes the money to your creditors. Debtors are advised to do their homework to ensure that they choose a reputable debt consolidation agency.

Instructions

1

Contact your state government to find out what the licensing requirements are for debt consolidation companies in your state. If state law requires that these agencies be accredited, you can contact the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies to find out if a company is a member.

2

Consider the qualifications of the company's credit counselors. Ideally, a top debt consolidation company should employ certified credit counselors who are trained to help consumers deal with their debt. Certification should be granted through an outside agency that is not connected with the debt consolidation company.

3

Contact the Better Business Bureau or your state attorney general's office to find out if any complaints have been lodged against any company you're considering. You may also contact the Federal Trade Commission to determine if any complaints have been filed. Conducting a basic Internet search could also lead you to websites that allow consumers to report complaints.

4

Consider the debt consolidation company's structure. If the company claims to be a non-profit or tax-exempt entity, you can verify this by contacting your state government. Avoid any company that refuses to answer your questions about funding or non-profit status.

5

Ask for a detailed explanation of the company's services and fee structure. If a debt consolidation company refuses to provide you with this information, this should raise a red flag. You should know exactly what the company will do on your behalf and how much you'll be expected to pay before you sign up for services.