Concerns before starting a Debt Consolidation program

debt consolidation was an answer to prayers for us. I researched the company we were going with - it was in good standing with the BBB. And for the first ten months it worked quite well. Then they were shut down and it was turned over to the Law Offices of Richard A. Brennan. Right now, I don't have a single good thing to say about that company.

For us, what seemed like an answer to prayers turned out to be a financial hell. It is one choice I certainly wish I had to do over. :(

debt consolidation program is different from a debt settlement program. You need to understand the program carefully before signing for it.

When you go for a consolidation program, all the defaulted accounts are brought back to current state and the payments are done directly through your consolidation company. You pay them and they send the payments to your various creditors included in the plan. This is done until all your accounts are paid off and updated with the bureaus.

Whereas, in a settlement program, the accounts must have to be in defaults. Basically, if you are allowed to remain current, the creditors will not know that you are going through some financial problems and are unable to pay the debt. Your accounts in default will only bag better results for you in the long terms. The settlement company will negotiate with your creditors and arrange a 'settled' amount. During this time, you are supposed to make monthly payments in a separate trust account opened with your settlement company. Once the creditors accept the proposals after a period of time, money is sent from the new account and all debts are paid off. The creditors will update your file with the bureaus.