A lot of families have debt. So, when an offer comes to help pay off that debt, it may be tempting to try it out. But you should be careful. Debt consolidation companies are for-profit businesses that can negotiate lower interest rates with your creditors and then roll all of your debts into one payment you pay.
Question: Sandra from Texas City asked if the letter she received about her debt is legit. It’s from a company called Credit Associates, LLC. The letter says they recently settled accounts with large banking companies 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.
Answer: We checked and Credit Associates, LLC is a legitimate company. Their website says typical debt negotiations take around 36 months.. so it is not a quick process. They charge a flat fee each time a settlement is reached and you approve it.
The Better Business Bureau does have a significant amount of complaints about the company including ruined credit scores because of late payments by credit associates. People also have complained about confusing terms. One person says, “they took more fee than paid off in debt.” But there are other people who are happy with the service.
How to check a debt consolidation company before signing up
You should search the BBB website for consolidation companies before you sign up. The biggest red flag is if a debt consolidation company asks for money upfront. The Texas Attorney General has a list of things to look out for if you are considering debt consolidation. Keep in mind you can negotiate some of this on your own.