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Step 1
ILLEGAL PRACTICES: Some debt consolidation companies actually encourage their clients to use fraudulent practices to lower their debt and improve credit. Be aware that by working with these companies, you will be held equally liable for prosecution. Stay away from companies that encourage you to contest every credit flaw on your report, regardless of whether or not the penalty is legitimate.
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Step 2
APPEARS LOCAL BUT ISN'T: Some debt companies attempt to boost their appearance of legitimacy by providing materials that make them appear to be a local company, but they are actually based out of another country. Research the company infrastructure at the Better Business Bureau.
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Step 3
TELEMARKETING: Be weary of a company that contacts you through telemarketing. If you decide to use their services, follow the research advice in this article, and then open your account through their website.
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Step 4
LARGE UPFRONT FEES OR AN UNCLEAR PAYMENT STRUCTURE: You should have a very clear idea of exactly what a service will cost you before you begin work with a consolidation company. A small application fee is fairly common, and some firms charge about a fee of about 10% of the total debt you plan to eliminate. If a company will be charging you more than this, make sure the increased charges correspond to very specific added services that you actually want and will benefit from. Ask to see a complete list of fees before you sign an agreement.
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Step 5
SERVICE HOURS: The company should be open during normal business hours. You may want to try their live customer service number to test how difficult it is to get a hold of a real person. Be sure to use the number for current customers, not potential customers, as service levels could vary between the two.
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Step 6
NON-PROFIT STATUS: Some of the best debt consolidation agencies are non-profits. However, others abuse or even lie about their non-profit status in order to bypass telemarketing laws or appear more trustworthy. If a company claims to be a non-fit, ask them for proof of their 501c3 status.
