Debt consolidation can be a very useful financial tool for someone that desires to take control of their financial future. Many people, from all income brackets, find that at some point their bills are just too much for their income. It can happen for a variety of reasons. You may have just moved out on your own and needed to purchase everything to start your own life, you may have just expanded your family, or you may have changed jobs and income levels.
Whatever your reason for debt consolidation, the most important thing to remember is to research the company you are planning to use before you commit to any specific program. There are five things which you should look for in a company before you enter into any debt consolidation plan.
You want to know who your credit consolidation company is affiliated with as a business. Some consolidation companies are affiliated with credit card companies and there is, in a way, a conflict of interest. You want to look for a company that is either an independent company or is affiliated with a charity or a banking institution.
2. Services Offered
Look past the advertisements and read the small print. You want a company that is going to work aggressively and quickly to resolve your debt issues. Some companies state in their small print that their services can take an extended period of time to complete. While this may be legitimate in some cases, this often translates into extending the monthly fees they charge you for their services while your paperwork remains on their desk in a pile.
3. Fee Schedule
Make sure that you are aware of all their fees. There will be fees to open the account, monthly maintenance costs and charges associated with the amount of debt they have reduced on each account. While this is very standard in the industry, each company will charge different rates. Review the rates of several companies as part of your research.
4. Software Capabilities
While this may seem an unusual point to research, it is very important. You want to work with a company that has a software system in place that can easily handle your accounts, payments and all the appropriate tracking. There are many companies out there that are using outdated or limited software programs that delay the process of consolidation and increase the amount of money you pay out to have these services performed.
5. Track Record
Once you have decided on a few companies that may be of help, it is time to research their track record. Look into the Better Business Bureau and the State Attorney’s office to see if there are complaints against the company. If you desire, look at consumer complaint postings, but remember that some personal opinions can be skewed. If your company has a lot of complaints against them on the consumer agency sites, you may wish to avoid their services.
Debt consolidation can be a very useful tool to regain financial control. It can reduce your overall financial obligations and allow you to become debt free in as short as five years. It is an opportunity that everyone can benefit from. However, as with any other financial decision, you must make an informed decision on what company to use.
Catherine Stephens, an author and small business consultant contributes this article toward more comfortable management of your debt. You will want to interview a few debt management agencies to be sure they are reputable, independent of conflicting interests, and also supported by up-to-date software. Without the latest tools, the cumbersome process of debt resolution could be passed on to you in larger fees.