Debt management companies - Why you should be careful about them

If you are drowning in debt and desperately searching for a way out, then a debt management program can really work for you. There are many companies in the market that offer different kinds of debt management program. But, choosing a debt management company has never been an easy task. There are many companies which have been sued by the FTC and Attorney Generals because of their fraudulent activities. So, it is very important to make sure that the debt management company you are selecting is a reliable one and their debt management program will not land you in a financial situation worse than before.

This is what happens if you chose a wrong debt management companies

In order to choose a debt management company, which can really offload your debt burden, you should keep in mind the following things:

• Don't forget to check the reliability- To be sure of the company's reliability, check its BBB rating. Find out how many complaints have been listed against the company and how many of them have been resolved. You should also gather information about the company from your local consumer protection agency and the State Attorney General. Also find some feed backs in various forums on their performance. If you find that the debt management company holds several unresolved complaints, don't rely on them for solving your debt problems.


• Don't get carried away by the non-profit status- Don't be misguided by the non-profit status of the debt management companies. There are many non-profit debt management agencies which charge high level of fees for providing debt management services. You should keep in mind that the non-profit agencies are also running their business to make money. The only difference is that, these agencies distribute their earnings in a different way. In many cases, the debt management companies use their non-profit status as a marketing tool.


• Get a written contract- Before enrolling for a debt management plan; make sure that you get a written contract. Carefully read all the terms and conditions before signing the contract and before making any payment. If the debt management company refuses to give you a written contract, just move on.
  
  
• Remember removal of negative listing cannot be guaranteed- If a debt management firm promises you to remove negative items from your credit report, you should better avoid them. This is because, no debt management company has the authority to remove negative listings from anyone's credit history; they can only try to negotiate with the creditors and the credit bureaus. So don't get impressed at their false commitment.


• Make a point that the debt management firm requires complete information- Always remember that a debt management company requires all of your current debt account statements before telling you about the fees and the debt reduction time. If a company gives you a quote without knowing about your debt accounts, interest rates on your loans and your creditors, then you should not consider it as a reliable one.


• Think before you stop making payments- Your debt management company may tell you to stop paying your creditors, once you enroll for the debt management plan. But don't stop making payments unless the debt management firm starts paying on your behalf.

Do not fall into these ad traps.

Always remember that it is worth going an extra mile for judging the trustworthiness of a debt management company, before delegating them the responsibility of debt reduction. Visit various debt consolidation communities and take expert's guidance before taking the important decision.