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Debt Consolidation: What the Government Recommends

If you’re having difficulty paying your bills, or you’re starting to receive dunning notices and calls from creditors, it’s time to stop living in fear of your financial issues. Don’t let the problem turn from bad to completely unsolvable; there’s help available.

Luckily there are Government approved debt consolidation programs that can help you take back control of your personal finances. These services are less drastic than filing for bankruptcy, but that still doesn’t mean that they’re for everybody. Let’s take a look at what debt consolidation companies and organizations really do; this will help you decide whether or not this method is the right option for you and your personal finances.

What is Debt Consolidation?

As its name implies, debt consolidation refers to the process of rolling all of your various debts into a single monthly payment. If you currently have multiple credit cards or loans that you are paying, debt consolidation is one of the best options to lower (or at least simplify the payment process. However, before you take any action you should consult some of the government sources from this article, in addition to speaking with a licensed credit counselor.

What to Avoid

Although government agencies support certain debt consolidation companies and methods, the Consumer Information page on the Federal Trade Commission website offers some crucial advice on how to protect your self from debt consolidation scams.

For instance, they advise you to avoid debt consolidation organizations with any of the following characteristics or policies:

  • Charge fees before they will settle debts, or enroll you in a plan that pressures you to pay fees
  • Encourages you to cut off communications with creditors without explaining the potential consequences
  • Claims they can prevent all collection calls and potential legal actions
  • Has outrageous claims that you can pay your debts for pennies on the dollar; if it sounds too good to be true, it probably is
  • Won’t provide you with any information about their services unless you provide them with financial information like credit card information
  • Attempts to enroll you in debt consolidation without discussiong your personal financial information with you
  • Requires you to make a payment before you’re accepted into their program

Debt Consolidation Programs that have Government Approval

The FTC and USA.gov debt information page both recommend finding your debt and credit consolidation companies through one of these agencies:

  • Financial Counseling Association of America
  • National Foundation for Credit Counseling

Both of these organizations have strong online presences and allow you to assess your financial situation quickly, and for free. If you’re tired of living with the stress that comes with credit card debt and past-due loan payments, you owe it to yourself to see if one of these government-approved agencies can help you simplify and lower your monthly payments.