Debt consolidation companies advertise that they can negotiate with your creditors for lower payments and interest rates. They claim they can help you repay your debt quickly and improve your credit score immediately. If this sounds too good to be true, that’s because it is. Problems with debt consolidation include:
- It is an unregulated industry under investigation by the federal and state authorities.
- These companies are not forced to deliver what they promise.
- People using these services can pay thousands of dollars in fees before any money goes to creditors.
Debt consolidation scams abound. I see many people who are being sued even though current on their debt plan payments. Take my advice. Chapter 13 is a much better alternative to debt consolidation.