With over $2.485 trillion dollars in consumer debt outstanding as of June, 2009 (Federal Reserve Statistical Release, August 7, 2009), it's no wonder citizens seek out help in managing their debts. Debt consolidation companies can roll a number of credit card, student loan, home equity line of credit, or other debts into one loan.
The benefits are numerous; borrowers no longer pay exorbitant interest rates on credit card debt. They don't have to juggle multiple accounts and payments to different lenders. Creditors are satisfied and stop phoning. Debt consolidation works when the lender is a reputable, ethical debt consolidation company with the borrower's best interests in mind.
Beware Scam Debt Consolidations
The promise of a lower monthly payment and a quick fix for consumer debt is so attractive to some stressed out and overspent consumers that they fall victim to debt consolidation scam artists. These criminals may charge an upfront fee before approving a loan, raise interest rates to an unmanageable level, or use the personal information obtained in interviews for identity theft.
A March 30, 2005, Federal Trade Commission press release lists the names of several debt consolidation companies to avoid, as well as a list of red flags for consumers seeking debt consolidation services:
- The company promises to get rid of unsecured debt
- The plan includes high monthly service fees
- The borrower is to pay the debt consolidation company each month, rather than paying off creditors
- The debt consolidation company guarantees they will remove accurate negative information from the borrower's credit report, instantly "fixing" their credit.
Debt Consolidation Companies, Rated by Users
TopTenReviews.com, founded in 2003, ranks debt consolidation companies based on an extensive list of qualifiers, including user reviews, Better Business Bureau rating, services offered, monthly and upfront fees, and more.
Each of the Top 3 Debt Consolidation Companies offer:
- debt management with monthly service fees under $50
- Better Business Bureau accreditation and ratings of A- or above
- professional advisers and self-help tools
- budget planning
- email and telephone support
- "very good" to "excellent" user ratings for credit counseling services
Top 3 Reputable Debt Consolidation Companies: Care One, DebtWave, and Coastal Credit Solutions
Care One, a member in good standing of the BBB since 2002, is recognized as the leader in debt consolidation companies and the winner of TopTenReviews.com's Gold Award for 2009.
DebtWave Credit Counseling manages debt by negotiating better rates with creditors, working to reduce penalties, and consolidating all outstanding unsecured debts into one monthly payment for the consumer.
Coastal Credit Solutions offers debt management or debt settlement. Their debt management service works much like DebtWave and Care One's, and they are also a member in good standing of the BBB (since 2005).
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