How to Avoid Using Bad Debt Consolidation Companies

It's difficult not to notice the incredible growth that there has been in companies offering debt consolidation programs and solutions over the past few years. Debt consolidation companies are amongst some of the biggest advertisers on the internet and there are now more loan consolidation TV commercials than there ever has been before. However, quite a few of these debt consolidation companies are currently being sued by a number of attorney generals, the IRS, and the FTC over their claims of being 'nonprofit' organizations.

A debt consolidation company, that will remain unnamed, has actually had a federal lawsuit filed against it and the FTC and five individual states have filed similar lawsuits against the same company. This unnamed company declared Chapter 11 bankruptcy but in actual fact are still operating under different company names.

You may find it interesting to know that many companies in this field no longer call themselves 'debt consolidation companies' because of the negative press that this legal action against the unnamed company has generated. It is more likely they use names such as 'debt negotiation' companies or 'debt settlement' companies now to describe what they do. Irrespective by what name they go by, these companies are likely still using illegal tactics and methods, and should be avoided at all costs.

You should check out all debt consolidation companies you are considering having dealings with, in fact it would be prudent to check out each company you deal with for that matter, with your local independent consumer protection office and the Better Business Bureau in the company's location or on the internet.

Knowing how to read into the information you gather is important as a good rating awarded to a debt consolidation company may carry very little weight and be totally misleading as over 75% of all complaints received by the Better Business Bureau do not, and will not, count against a company's rating if the complaint is deemed to have been resolved.

The Better Business Bureau, although a useful source of information, has no power to investigate complaints made against debt consolidation companies and nor does it have the authority to resolve them neither.

Utilizing the internet is an ideal way to broaden your search for a reputable company to use as there are a number of review sites you can visit that have consumer feedback, just cross off those companies that people have complained about.

One final piece of advice is to avoid any consolidation companies or organizations that have their address registered in the states of Maryland or Florida because companies registered in these two states are non-regulated. Avoiding those companies registered in Maryland and Florida is quite easy due to the large number of companies supplying this type of service that are registered elsewhere.