What to know about debt consolidation offers
Many families are in debt. So when an offer comes along to help pay off that debt, it can be tempting to give it a try. But you should be careful. Debt consolidation companies are for-profit companies that can negotiate lower interest rates with your creditors and then consolidate all of your debts into one payment.
Question: Sandra from Texas City asked if the letter she received about her debt is legitimate. It comes from a company called Credit Associates, LLC. The letter says they recently settled accounts with major banking firms like Chase and Capital One. And if you have an account with these companies, you may be entitled to a reduced settlement of your credit balance.
To respond: We have verified and Credit Associates, LLC is a legitimate business. Their website says typical debt negotiations take about 36 months…so it’s not a quick process. They charge a fixed fee each time a settlement is made and you approve it.
The Better Business Bureau has a large number of complaints on the business, including ruined credit scores due to late payments by credit associates. People have also complained about confusing terms. One person said: ‘They took more fees than they paid debts’. But there are other people who are satisfied with the service.
How to Check a Debt Consolidation Company Before You Sign Up
You should search for the BBB site for consolidation companies before registering. The biggest red flag is if a debt consolidation company asks for money up front. The Texas Attorney General has a list of things to watch out for if you’re considering debt consolidation. Keep in mind that you can negotiate some of this on your own.
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