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It wasn’t until the past few years that people have begun using debt consolidation services at such a rate. Even though these companies have been around for decades, it took the recent recession to make people realize there were a few options available to them. People who are now in financial upheaval do have a place to turn.

By the time you consider consolidating your debts, you might very well already been in financial straits. Your payments are late, and your credit has been adversely affected. Perhaps you have even tried unsuccessfully to negotiate better terms with your lenders.

There are all sorts of debt consolidation companies and services that offer some type of debt protection and planning. A few are well-established and well-qualified non-profit organizations, and still others are scam artists. A few companies will show you how to do all this yourself, while others will insist on doing everything for you. Just be careful which company you choose to deal with because there are many pitfalls you can get trapped in.

Even though services vary from organization to organization, they all refer to themselves as ‘credit consolidation services, and because of this, scammers have invaded this business model and caused problems for many unsuspecting consumers. Before committing to anyone, and before signing any paperwork, check them out with their local Better Business Bureau.

Make sure they are real companies, too. Check their state’s business website and look for their name and address. See how many employees they have, and make sure they are still ‘in good standing’. If you don’t see any mention of them on this site, that’s a big problem. It’s all too easy to build a cheap website and get a fake address and a phone number, but this doesn’t mean you have legal permission to do business.

The entire purpose of trying to consolidate your debts is of course to get your monthly payments low enough where you can pay them, and still be able to control your income. You’ll probably need to pay something for the services provided, but this should not be more than a low percentage of the monthly payments arranged. Remember, all this company will do is arrange new payment terms for you and then it’s up to you to pay your bills.

When they get agreement from one of your creditors to restructure your loan, ask for proof. Too many companies do nothing at all, then tell you your new payment. Once you start paying that lower amount, you could be shocked at what happens next, and even worse, the company you hired won’t return calls or emails because they got what they wanted ‘ your initial deposit.

Stay away from bad debt consolidation companies that insist that you send payments to them so they in turn can pay your bills. This is ludicrous. This is the most common scam of all. Find a reputable consolidation debt company to help your financial troubles.