3 myths about debt consolidation companies

June 11, 2007 at 6:30 pm 11 comments

CNNmoney recently featured an article highlighting key things that debt consolidation companies can’t do. One of which happens to be illegal. But, people keep falling for these ‘con’-sters because of the hole they’ve dug themselves in with debt. If you’re in the thick of it and can’t see a way out, don’t fall for these common myths about debt consolidation companies.

Myth 1: Getting out of debt is easy. The less reputable debt consolidation companies will promise you that they can fix your mess easily and quickly. And, some even claim to help you increase your credit score in the process.
Truth: Getting out of debt is a tough road. Sure, it’s a bumpy ride, but it’s worth it. See number 3. in Do you need a game plan for your finances?

Myth 2: We can clean up your credit history. That’s right. Some of these debt consolidation companies make the audacious claim that they can ‘cleanse’ your credit report of all of the bad marks.
Truth: Not only can they not clean your credit history, it’s illegal. The only items that can be removed from your credit report are debts that are inaccurate. But, the only way you clean up your credit report, is by paying your bills on time. And this takes a little while.

Myth 3: Only a debt consolidation company can help me get out of debt. The reason you’ve seen an increase in television commercials and radio ads for debt relief, is that people believe these are ‘needed’ services.
Truth: You don’t need a debt consolidation company at all. These companies can’t do anything you can’t do on your own. In fact, some of the ways these companies ‘serve’ their clients is by negotiating with creditors on your behalf. Listen, nobody knows your situation better than you. Why would you let a complete stranger handle it for you? See number 3 in Do you need a game plan for your finances?

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Entry filed under: Budgeting, Debt, Debt Consolidation, Debt Reduction.

What $10 can do you for you College Edition: Top 10 educational expenses

11 Comments Add your own

  • […] It’s both funny and irritating all at once. What are people thinking? You can find my original post here. The copycat is over at Young Black Professionals Guide. They even kept the title of the post. I […]

  • […] (article via moneytalk) […]

  • 3. Fredric  |  June 12, 2007 at 4:08 pm

    as i said in the pingback above, i’m one of the authors and i didn’t know. i fixed it. hopefully no hard feelings.

  • 4. Consolidate Credit Card Debts  |  December 1, 2007 at 8:44 pm

    Firstly, getting out of debt is not easy! It takes a lot of home work and it may even mean a mixture of options mentioned in your post. If in doubt you should always seek the help of an ‘independent’ debt advisor who can offer some free advice initially. And if possible always try and find an advisor that is recommended by someone you know.

  • 5. I Know Debt  |  October 8, 2008 at 3:35 pm

    The debt consolidation company I went with also helped me with my credit repair. I checked them out with the BBB before signing up with them and couldn’t be happier with my results.

    As long as you’re diligent in your research, you’ll end up with a great company.

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