- No oversight or verification: When you sign up with a qualified debt consolidation service, you will not have to trust implicitly that your account is being handled properly and that your payment, received monthly, is being properly distributed to the various debts that you owe. You will not have to trust this blindly because a respectable company will provide you methods for verifying that they are performing their work as promised and that your payments - if received promptly, are being distributed to your creditors promptly and on time as agreed. Many disreputable debt consolidation companies will receive the payments on time and not deliver them to the proper creditors in a timely manner in order to keep the money for themselves. This will have the effect of negating any deals that may have been made on your behalf with the creditors and cause you late fees and possibly damage your credit score as well.
- Avoid reusing freed-up credit: As a consolidation company begins to pay down your debt for you, you will find that your credit on revolving accounts becomes available for you to use again where it may once have been tied up. You should not look at this as an excuse to go out and spend that credit again, driving yourself back into debt. You are paying money for a debt management money to handle this consolidation for you, that should be incentive enough to avoid making the same moves that got you into the position of requiring a consolidation in the first place.
- Insufficient Research:You should know your debt management company well before you sign a contract with them or send them any money for service. Knowing them well beforehand means doing research and finding out all that you can about them before services begin. Surf the Internet, read reviews, talk with friends and family, verify claims made by the company such as non-profit status or religious affiliation, and ignore any companies that make outlandish, impossible-sounding claims.