The knee jerk reaction to jump on the debt consolidation wagon is often a result of responsible people unexpectedly finding themselves in the embarrassing situation of out of control debt. They may end up in the unemployment line from no fault of their own or the financial burden of a medical emergency has tipped the scales from comfortable living to living paycheck to paycheck.

Credit card consolidation is a financial service that works with consumers and lenders to provide debt relief. The relationship they have with creditors and their expertise at negotiating gives them an edge that consumers may not have to find a solution that works for both lender and consumer. A successful arrangement with a legitimate company will lower the total amount of money to be repaid by 10% – 50% and help set up a schedule to have the debt paid off, often ahead of schedule.

If you choose to try debt consolidation, be sure to first call or visit the Better Business Bureau website at www.bbb.org and check out both the positive and the negative feedback. Be especially wary of new companies who may not be listed. The second consideration is the charges. Are there set-up fees or monthly management fees? Take the time to comparison shop; talk to friends or family members who have successfully navigated through the process.

The unscrupulous debt consolidation firm will make bold-faced claims that cannot be substantiated and pocket your money. Here are the tip-offs that you may be dealing with a less than honorable consolidation company.

• Advise their clients to ignore all credit calls
• Promises a clean credit record
• Collection calls continue after assurances that they will cease
• Takes 6 months to process

Any company that would suggest that you avoid your creditors is giving bad advice at best and scamming you at worst. You must always continue making payments, even if you cannot manage the full amount, until the negotiating process is complete and you’ve signed the paper work.

There is no way to clean your credit report short of responsible financial management and patience. Some negative information will remain for 7 years. Continuing to be harassed by your creditors may indicate that no agreement ever was put in place. Respond to the callers with the phone number to your debt management company. Stop paying the consolidation company immediately.

The majority of debt negotiations rarely take longer than one month to be finalized. Any company that suggests that it will take longer is hoping to drag out the process to collect more from their clients. Obviously, if you are served court papers to appear for a non-payment judgment against you, any consolidation agreement you may have had was never put into place. Immediately stop paying the company and consider taking legal action to recoup your losses.

The damage of unpaid debt cannot be overstated. The resulting free fall of your credit score will be a negative factor in whether you are approved for a mortgage, credit card or loan for years to come. If debt consolidation is not the answer to your financial woes, why not consider approaching your creditors yourself and attempt to negotiate a reduced payment? Lenders do no want to see you fail any more than you do.

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