How to Find Legitimate Debt Counseling Companies

When looking for a debt counseling company it is important to find a legitimate one who will actually be able to help resolve your debt troubles.

Debt counseling (or credit counselling in the US) is a process which involves offering education to consumers on how to avoid incurring debts that cannot be repaid through establishing an effective Debt Management Plan and Budgeting. A debt councilor will negotiate with creditors to establish a debt management plan for the consumer; helping them to repay their debts, usually with reduced payments, fees and interest rates.

Once a customer begins a Debt Management Plan, the creditors will close their accounts and restrict any future charges. The most common benefit of a Debt Management Plan is the consolidation of multiple monthly payments into one, simple monthly payment, which is usually less than the combined amount of the individual payments previously paid. This is because creditors will usually accept a lower monthly payment from a customer in a Debt Management Plan than if they were paying the debt on their own. Some Debt Management Plans claim that payments can be cut by 50%, although a reduction of 10-20% is more achievable.

The second feature of a Debt Management Plan is a reduction in interest rates charged by creditors. A customer with a defaulted credit card account will often be paying an interest rate of approximately 30%. A debt counseling company will be able to negotiate with creditors and they will sometimes lower the annual percentage rates charged to just 5-10%, and some will eliminate interest altogether. Debt counseling agencies often then claim that their customers will be debt free within 3–6 years, rather than the 20+ years it would take to pay off their large amount of debt at high interest rates. For more information on debt counseling visit http://thedebtsreliefreviews.com/.  

Finding a company offering debt counseling is relatively easy, with adverts on the internet, television and radio. However, finding a legitimate debt counseling company who can actually work with you to help you begin to eliminate your debt can be a problem. There are a few ways in which you can check the company you decide to work with is legitimate.  Begin by checking with a professional organisation for debt and credit counseling companies, such as the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). These have standards that debt counseling companies must adhere to in order to become members.

Next you should try and find out how the company has treated its customers in the past. This can be done through checking with the Better Business Bureau to see how many disputes the company has had in the past and whether these disputes have been resolved.

You can also do a search using a search engine such as Google to see what has been said about a company by typing the company’s name and add in the word “reviews”. If there are a lot of complaints it would be advisable not to choose that company. However, if there are a lot of really good reviews, it could be the sign that many of these reviews are fakes, written by the company. Another thing to look for is if a company promises a result, as a legitimate debt counseling company will not guarantee to lower your interest rate or monthly payment. Also watch out for companies that charge a percentage of your debt or that asks to be paid before carrying out any work.

Often, we can tell if a company is legitimate. Follow your instincts and if you have any doubts, walk away.

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