Debt Consolidation Questions That You Should Ask

There are mixed reviews concerning debt consolidation out there. Mixed reviews can alter a person’s decision on whether to consolidate or not. All you have to do is find out if combining your debt is the best available option and if the company is for you by asking questions.

The first question you need to ask is: What will this company do for me? The term “Debt Consolidation” is floating around everywhere these days and it can mean a number of different things. Some companies operate by giving you a loan to help you get out of debt, others simply combine all your payments and distribute them to your creditors. Knowing how the company works will benefit you, otherwise you may be at a loss.

The second question you need to ask is: Do they charge a fee for their services? Almost every debt agency charges some kind of fee to provide you with their services, even if they’re non-profit companies. If they do charge a fee, ask if the fee is a percentage of your debt of if it is a flat fee. Always be wary if the company wants more than $50 monthly.

The third question to ask is: Are you certified by an agency? It’s best to work with a company that is certified. A few agencies out there certify consolidation agencies through tests, such as the National Association of Certified Credit Counselors, The National Foundation for Credit Counselors, and the Association of Independent Consumer Credit Counselors.

The fourth question is: What kinds of debts can you consolidate? Most consolidation companies can help you out with non-secured debts such as medical bills, collection accounts, and credit cards. If the company says they can help you with secured loans such as your car loan or mortgage, be cautious.

The last question you need to ask is: Can I terminate this agreement? You should be able to terminate your agreement at any time with the company without any penalties, unless you’ve taken out a loan. Find out if the company requires you to end the agreement and get it in writing.