Finding a Legitimate Debt Management Program: How to Avoid Losing Money on a Credit Consolidation Program Scheme With thousands of internet and TV advertisements for debt management programs, it is hard to know which company to chose for credit consolidation. Choosing the wrong debt management company may end up seriously harming credit scores or sinking one even further into debt. What avenues can be used to determine the best company for credit consolidation? The following suggestions will explain what to look for in a debt management company. Avoid Debt Management Settlement Firms When researching a prospective credit consolidation company, avoid companies that will “settle” debt. The concept behind these firms is to take the client’s money each month and hold it for months while they negotiate a settlement with the creditor. Often debt is eventually settled for less than what is owed. This concept may sound perfect to someone who is drowning in debt. However, this method has one very serious drawback. The debt management company will ask the client to stop paying his or her credit cards and instead send that money to them. Credit cards may go unpaid for months while money is being collected for a settlement. Once a settlement is reached, the debt settlement firm then pockets the money sent each month. This will leave the debtor’s credit score seriously damaged. These delinquencies will stay on a credit report for five to seven years. Find a Debt Management Program that Works By Lowering Interest Rates High interest rates on credit cards trap customers in a vicious cycle. The minimum payment on the card each month may be only slightly higher than the amount added in interest. The best credit consolidation companies work by negotiating only the interest rates with creditors. The client will still have to repay all of their debt, but will be able to do it much sooner. One monthly payment will be sent to this agency and they will disperse it each month, on time, to the creditors. This method is not a magic fix. Depending on the amount of debt owed and the amount the consumer can afford to pay each month, it may take four to six years to pay off debt. Also, these payments are likely to be the same or higher than the minimum credit card payments that were previously being made. The consumer will also not be permitted to use current credit cards or open new ones, even for an emergency. However, the major benefit, aside from lowering interest rates, is that for the duration of the program the consumer’s credit score will not be harmed, as long as payments are made on time. Deciding to enter into a debt management program is a major step one can take toward getting control of credit card debt. Finding a consolidation company that lowers interest rates, rather than settles debt, will keep the consumer from further damaging his or her credit scores.