In today's day and age, with so many people struggling under credit card debts and low credit scores, it is often tempting to sign up with one of the debt settlement, debt consolidation or credit repair companies for what seems like a quick financial fix. However, the truth is that while many of these companies may tout a pain-free process, many of these types of plans can actually do more harm than good, and other debt relief options may in fact really be the best way to go.
For example, with a debt consolidation company, the idea is that a person will roll all of their debts into one. This then creates a simplified once a month payment that is due as opposed to keeping track of the various different bills. And while this may sound nice at first, consumers with excessive debt should keep in mind that many times combining all the debts into one also means extra fees and high interest rates. This can lead to a person actually paying more out of pocket than if he or she did not consolidate.
The Better Business Bureau also warns consumers to be wary of the claims, as some of them may indeed be too good to be true.
Overall, while it's sad that many consumers may sign up for what they think is a good debt relief tool without knowing the true implications, the fact that this happens highlights the importance of consulting with a reputable attorney who has experience helping people explore different debt relief choices that may be available to them.
This way, while you can learn about whether debt consolidation is the best option, you can also learn about other financial tools that may be even better for your specific financial situation.
Source: The Wichita Globe, "Look for red flags before hiring a credit repair company," Roberta Namee, May 12, 2012