Considering Online Debt Consolidation?

A Credit Article Contributed by Mark Mcclelland

Online Debt Consolidation Firms are a Dime a Dozen

It only stands to reason that every credit counseling or debt consolidation organization you come across while searching the Internet can be classified as an online debt consolidation firm. They all ask you to fill out a small bit of information, your name, the amount of credit card debt you owe, your e-mail address, your mailing address, and telephone number, and perhaps a bit more, and they'll evaluate your situation and give you a call for your free initial consultation.

There are so many people are out of work who continue to use their credit cards to simply buy necessities, that the debt they carry is increasing at an alarming rate. And of course, it wasn't but a couple of years ago that the economy and stock markets were booming, and people used their credit cards with abandon, running up huge balances due.

But now, burdened with credit card debt they didn't expect unexpected, a significant percentage of consumers are looking for any way possible to get out from under that debt, spurring on a tremendous increase in the number of firms that offer debt consolidation services of some kind or another.

Telling the Good Online Debt Consolidation from the Bad

While there're hundreds and hundreds of online firms offering debt consolidation services, any decent online debt consolidation organization is going to be accredited by the Association of Independent Consumer Credit Counseling Agencies, or the National Foundation for Credit Counseling. That's where you should start looking. The various Consumer Credit Counseling Services are all accredited, and most states have a local "chapter".

On the other hand, scams abound in this industry. Unfortunately those least able to bear the burden are preyed upon the most. To avoid being scammed, watch out for the following:

1) The organization tells you that you'll have to pay upfront before they actually provide you with any of their services - according to the Credit Repair Organizations Act, credit repair service companies cannot obligate you to pay any fees or charges until they've actually completed the promised services.

2) The organization doesn't tell you what you should be able to do yourself for free - any company that doesn't tell you what other options are available to you is probably not one you'd want to deal with anyway.

3) The organization tells you to let them deal with the credit reporting agencies, and not to contact them yourself - no legitimate company would tell not to do something that you have very right to do, and should do in any case.

4) The organization suggests that you try something that sounds fishy or illegal, like creating a new credit identity by applying for and using an Employer Identification Number; in this business, if it sounds fishy it's probably illegal.

What Should You Look for in an Online Debt Consolidation Firm?

Any legitimate online credit counseling and debt consolidation firm will give you, or send to you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you put your signature to anything. According to the Credit Repair Organizations Act, credit repair services (and any firm that provides credit counseling or debt consolidation services come under this banner) are obligated to do so.

A decent company will provide a written contract that clearly identifies your rights and contractual obligations, giving you the opportunity to review it and seek legal counsel and advice if you so desire, before you sign it.

Also, legitimate organizations don't make outrageous claims; make any guarantees or promises that they might not be able to fulfill.

And most importantly, legitimate companies won't charge you for any services rendered - and that includes "starting the process" - until they have completed delivery of all promised services; as matter of fact they're legally prevented from doing so; and they can't perform any services until you've put your signature on a written - that's written, not online - contract. And, by law, after you sign, you have three days to cancel the contract without incurring any penalties, fees, or other charges.

Legit companies know and abide by these laws...scammers will try to slip around them. If the company you're dealing with tries to slide one by you, move one... there're plenty more online firms out there.