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Questions You Should Ask Debt Consolidation Companies

Woman  talking on the cell phoneDebt consolidation is one of the options for getting out of debt. It entails combining your individual loans into one loan with a lower interest rate. When you decide to look for a debt consolidation company, the huge number of choices available will surprise you. This makes selecting a debt consolidation company difficult. So how can you know that you’ve chosen the right company? Listed below are some of the questions that you should ask debt consolidation companies.

How much do you charge?

The main reason why people turn to debt consolidation companies is to get out of high interest debts. It doesn’t make sense to choose a company that charges a high fee for its services. Use a debt consolidation calculator to determine if debt consolidation would be worth the trouble.

What are your terms and conditions?

Pay attention when the debt consolidation company tells you how they will assist you in getting out of debt. The company will outline its plan and if you feel you couldn’t stick to it or if there is something vague about its terms and conditions, be sure to ask for clarification before you sign anything. That way, you will know what they plan to do as well as what you are expected to do.

What type of debt do you cover?

You should ask about the types of debts the consolidation company will cover. It would also be wise to ask about their past experiences. That way, you will get a rough idea on what to expect – again before you sign anything.

How long will it take to clear all your debts?

The main aim of consolidating your debts is to get a lower interest loan and clear your debts within a shorter period of time. Ask the company whether you could make larger monthly payments to become debt free faster.

These are the main questions you should ask debt consolidation companies to find a reputable one to assist you with your debt problems. In addition to these questions you should also do your homework and find out more about the company you want to approach. Remember that there are thousands of companies out there and some of them are frauds. Narrow your list of companies down to a half dozen or less and then check how long each one has been in operation. Also check the reviews. If a company is as reputable as it claims to be, it will be easy to get recommendations from people it has helped before. And be sure to compare the rates from the various companies and then choose the one with the lowest rates.

What is its customer feedback?

There are very many review sites on the internet. If a company is truly reputable, it will have hundreds if not thousands of positive customer feedbacks. On the other hand, if it has a significant number of negative customer feedbacks, you should stay away from that company and search for a better one. You can also check the consolidation company’s rating with the Better Business Bureau (BBB). If its rating is low, think twice before approaching it.

Why it won’t work for everyone

Finally, debt consolidation will not work for everyone. For instance, if you are heavily in debt and you are 6-8 months behind on your monthly payments, debt consolidation might not be the best option for you because all you would do is move your debt from one place to another without reducing it. On the other hand, debt settlement could save you thousands of dollars because you will pay only a small percentage of your total debt. Therefore, you should talk with a professional and explain your situation. Based on what you tell your expert, he or she will be able to advise you accordingly.

By Samantha Seiffert
I am a personal finance blogger for National Debt Relief, a Debt Management Company that has helped thousands of Americans facing credit card debt problems. We help with debt settlement, debt management, and other debt related financial crisis' facing con

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