Who and What is a Debt Consolidation Company?

A Credit Article Contributed by Mark Mcclelland

The Emergence of the Debt Consolidation Company

You know it's true even though you may not want to admit it, but without the mountain of debt American's are building through their love affair with the credit card, there wouldn't be any such thing as a debt consolidation company. They're all over the place; they advertise sop much on TV and the Internet that you just switch channels or mark the e-mails as junk mail. They claim that they can save you thousands of dollars, putting it all back into your pocket so you can buy all the things you deserve. You have a right to be debt-free and they're going to see that it's so.

At the middle of this storm of advertising sits a specialized industry that oftentimes only make matters worse...the credit counseling and debt management industry. While there are indeed a few good companies - just like there're a few good men - there are far too few for our needs. Some of the agencies are actually blatantly fraudulent. Others are merely crooked being run by executives with, well let's just say, questionable backgrounds.

These agencies, most of which claim nonprofit status, will pay their senior executives outlandish salaries, and pay outrageous fees for goods and services to companies owned by those close to the agency.

The entire industry is a fertile field for scammers, and the sad part is that they make their millions off those least able to afford it, those deeply in debt and seeking help out of the quagmire.

What Kind of Person Does a Debt Consolidation Company Target?

As the economy continues it's lackluster pace (not necessarily in terms of corporate profit, but certainly in terms of the return of high paying jobs), and with Americans gagging on more than $1.6 trillion in consumer debt, consumers are looking for any way possible to help them get their finances back under control so that they can return to spending what they really don't have to begin with like there's no tomorrow.

The number of consumers with serious debt problems that fall prey to these agencies has soared to record highs. Last year, more than 10 million consumers looked into some company or another that provides debt consolidation programs. And the rate is increasing by about a million new prospective targets a year.

Many of the shadier agencies buy names of consumers who're overloaded in debt from mortgage companies and other agencies, and then use high-pressure sales tactics to induce then to sign onto high fee, low return programs. Sometimes the debt consolidation company will simply vanish, along with their client's money.

And those who are supposed to regulate the industry have done a really pitiful job so far. Only recently have state regulators woken up to the abysmal depths of abuse to which the credit counseling industry has sunk. Now they're starting to pass legislation in an attempt to rein in an industry running rampant through the fields of consumer's hard earned money. For example, Maine has recently enacted a law that requires registration and bonding of credit counseling agencies.

But Not All Debt Consolidation Company's are Bad are They?

Of course not, but they're sure hard to find amongst the flood of those that range from simply shady to outright thieves. To be sure, many agencies aren't in trouble, either financially or with the law, and have indeed helped consumers turn their financial lives to the good. And the best of these actually take an active interest in their clients' wellbeing, providing as much guidance and help as they need.

These agencies develop detailed and personalized plans for their clients in one-on-one meetings, as well as providing lots of free information and seminars on such topics as developing finance skills, budgeting, and debt management. In addition, these fees charged by the best credit counseling and debt consolidation company's trend to be on the reasonable end of the spectrum.

Among agencies that draw favorable reviews are some of the various Consumer Credit Counseling Services, and practically all of the best are members of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.