How Do Debt Consolidators Work?

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Debt consolidators are primarily hired by credit card companies to get people with credit debt to pay some part of their debt. Be cautious of debt consolidators using the fees paid for their service to pay off credit card companies with insight from a registered financial consultant in this free video on credit debt.

Part of the Video Series: Money Management
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Video Transcript

There is a new emerging career in America called the debt consolidator. And what it is is they are primarily hired by credit card companies and they advertise on talk radio and various other places and tell people that they have gone over the line into too much credit card debt that they can help them. Be very cautious of this because what happens is credit card companies hire debt consolidators to draw in this type of business. They know the credit card companies that eventually if you don't pay any money at all, you will be a complete write off to them. If you work through a debt consolidation company you have to charge a fee and they will take your money and go back to the credit card company and make an offer as to how much credit you will pay and none beyond that. The credit card companies willing to take that money as opposed to nothing and pay a fee to a consolidator, however they will mark your credit in a negative way that you went through a consolidator to do just that. So be very, very cautious and use that as a last resort prior to bankruptcy if that's what you need. This is Patrick Munro talking about how do debt consolidators work.

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