Debt consolidation is a term that gets thrown around a lot as a solution to stubborn high-interest debt like credit cards and delinquent medical bills. It makes sense so many Americans are looking for productive ways to address their debt, as the average amount of household debt stands around $5,700 and the average amount of debt for households carrying over a balance is higher than $9,300. There are actually a number of ways to approach consolidation, from taking on a debt consolidation loan to entering a management or settlement program.
What do all the methods of debt consolidation have in common? One of the pillars of success across the board is working with a reputable debt consolidation company, whether it is an online lender, a credit counseling agency or a relief firm. Your choice of partner will influence not only whether or not you are able to eliminate your debt(s), but how much it costs and how long it takes as well.
Here are some qualities of the best debt consolidation companies to keep in mind.
Look for Honest Online Reviews
You should have no problems looking up online reviews for any debt consolidation partners you’re considering before making a move — that’s the beauty of the internet.
It should be easy to get information about other people’s experiences with a certain company, as reputable companies tend to have dozens, hundreds or even thousands of reviews posted for easy viewing. Take note of how people talk about their experiences with a certain company, as well as their experiences with customer service and their financial outcomes. Even though it seems paradoxical, make sure there are some neutral or negative reviews mixed into the mostly positive ones — as this tends to indicate people are, in fact, being honest about any hurdles they faced.
Third-party reviews offer another valuable source of information about what to expect from a certain company.
Avoid “Too Good to Be True” Offers
Offers that seem too good to be true, well, often are. Trustworthy debt consolidation companies will avoid behaviors like:
- Charging you fees before providing a service (whether it’s settling, enrolling you in a debt management plan, etc.)
- Making promises or guarantees about the results it can get you.
- Saying it can stop collectors from contacting you or suing you.
- Requiring you to pony up personal information before offering you ample information about itself.
- Trying to get you signed up without making sure your financial circumstances make you a good fit for its services.
As the Federal Trade Commission outlines, shopping for a debt relief solution is a process best undertaken with caution. Reputable consolidation companies will gladly and proactively provide the information you need to make an informed decision. Be wary of any organization trying to get you to sign up without going over the potential risks and outcomes, or pressuring you to offer up your personal information and pay fees right away.
Knowing what qualities to look for in good debt consolidation companies will help you avoid scams and know what to expect — be it on a loan, a balance transfer, debt settlement or debt management. Unfortunately, consolidation scams have robbed consumers of millions of their hard-earned dollars over the years.
The best consolidation solutions have a commitment to transparency and ethical practices. Reading reviews online and knowing which “red flags” to avoid will go a long way toward helping you choose the right one.