Debt Consolidation Programs

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Debt Consolidation Programs
Previously we explained what a Debt Consolidation Program is, how it works and when to consider. This article continues to explore free debt consolidation programs pros and cons.

   Looking for alternatives or "Programs" for dealing with debt? Then see our Debt and Consolidation Summary

Watch For Good

Reputable operators will provide free debt educational resources and advice together with tools to help you budget, manage and control debt, and perhaps networking opportunities. Note: these services should be available for free.

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Debt consolidation programs that are worthy of pursuing should make such resources available regardless of whether you enroll in one of the debt programs or not.

Sensible choice debt programs providers should have been in business for 5 years or more and be very clear as to how, and what they collect any fees for, and the administrative cost to you under the debt consolidation programs that they run should you enroll.

Watch Out For Bad

If following an initial credit counseling session and review of alternatives it is decided that such consolidation programs are your best way forward, then before you enroll with any provider, consider what the best debt consolidation programs avoid:

  • Charges for usage of educational resources, access to tools, materials or what should be free debt programs information.
  • Debt programs fees: The best debt consolidation programs do not come with any "Membership Fee", "Application Fee", "Maintenance Fee", "Annual Fee", "Negotiation Fee" or charges for separate creditor accounts involved. Avoid any provider calling for "Donations" or "Voluntary Contributions". 
    Note: a small set up fee at the start of any debt consolidation programs is acceptable - but the actual programs' cost, that is, the administrative fee for running debt consolidation programs should be contained within your one monthly payment. (Note that a Professional Credit Counselor may take a genuine different approach, as one of the (Who) provider choices.)
  • Interest rate reduction promises (e.g. zero percent, down to "just 2%" or "guaranteed").
  • Any company that says it can remove negative information off your credit history. 
  • Instant quote forms.
  • Those advertising credit score/report "repair services". 


There are various pitfalls associated with debt consolidation programs:

  • High dropout rates. The number of people dropping out of debt consolidation programs is high. The problem lies in the fact that the cost of your monthly payment may not be vastly below what you collectively have been paying to creditors each month yourself. If your financial situation worsens within the duration of the debt programs' repayment period, then payment inflexibility may lead you to default (although these debt programs may leave you no worse-off than before).
  • Scam operators of debt consolidation programs. Worse than just high fees - a company may hold back some of your monies and not pay your creditors on time or at all. Other scams could involve identity theft.
  • Not doing a good job of researching several potential providers, together with reviews could lead to disaster.
  • Being drawn in by the idea of Non Profit Debt Consolidation Programs without understanding that there are both genuine and bogus non profit entities, or understanding that Non Profit Debt Consolidation Programs does not mean that they are free.
  • Failing to make meaningful or significant changes in one's spending habits, not exercising proper budget management or a willingness to learn, or expecting too much of debt consolidation programs.
  • Some creditors may not be prepared to negotiate over your accounts or offer negligible concessions.
  • Accidental late payments or incompetence on the part of the operator could lead creditors to withdraw from debt consolidation programs. 

Success - Requires

  • Thoroughly researching several choices of debt programs providers, comparing and asking questions.
  • Debt programs invariably require a change in spending habits and a strong commitment to budgeting.
  • That you make payments to debt consolidation programs on time, and with no shortfalls.
  • That you monitor progress and statements regularly. 



Consider all other options and alternatives to debt consolidation programs including Debt Settlement or Debt Consolidation Loans. See our Debt and Consolidation Summary of alternatives.

Do It Yourself - Debt Consolidation Programs 

It is possible to negotiate with creditors directly yourself. If your credit score is still reasonable then you may be able to get individual lenders to reduce your interest rate and perhaps waive a fee. Lenders may be more inclined to do this if they believe that you are about to enter bankruptcy as the alternative. Some financial commentators advocate establishing your own plan to pay off debt. Free debt consolidation programs resources and an initial session with a counselor may give you the confidence to plan your own plan.


  • Absolute change in spending habits and downsizing, selling things to pay off debt and cutting out.
  • Debt programs require strong self-discipline
  • Debt programs require an end to the use of cards and other credit sources.
  • Creating a "buffer account" to deal with inevitable unforeseen expenses. 


  • It's free. Debt consolidation programs run by yourself do not involve fees. If you can negotiate some reduction in interest rate yourself, it may be cheaper.
  • Maintains payment flexibility.
  • Consistent with the success culture required regardless.
  • Avoidance of potential unscrupulous operators or fraudulent debt consolidation programs.
  • Where you still remain "current" avoids potential negative credit report implications. 


  • Lack the skills or bargaining power to reduce interest rates that debt consolidation programs providers have.
  • May feel isolated


Best Debt Consolidation Programs

  • Check that the company has accreditation or membership of the National Foundation for Credit Counseling (NFCC) or Association of Independent Consumer Credit Counseling Agencies (AICCCA) and has independently certified counselors on board. 
  • Check that the provider is licensed to offer services in your state. Ensure that you have received proper credit counseling before enrolling in debt consolidation programs. 
  • Check with your creditors to ensure that the concessions described by the programs' operator are being given to others.
  • Get a quote in writing. 
  • Cross check the basics of the plan offered with another if possible. 

  • Get a copy of the plan and verbal promises in writing. 
  • Feel confident/ask about privacy. How does the company protect your personal info. 
  • Read through agreements carefully and understand terms. Watch for any hidden fee or penalty. Do not sign without first reading and learning about debt consolidation programs.
  • Call to verify that creditors have agreed to participate in the plan that is proposed, before making first payment to the debt consolidation programs' operator. Note: certain creditors may require that a first payment be made to an operator - before they will accept programs. If you are advised this by any debt consolidation programs' operator, verify with the creditor that this is indeed true - before you send money to them. 
  • Check and ensure that the provider will be paying the creditors by the applicable due dates, per correct billing cycles. 
  • Carry on making payments to your creditors during the transition period into debt consolidation programs and stop only when verified that the provider has made a first payment to all creditors. 
  • Monitor progress and check monthly statements for payments made and the rates. 
  • Cut-up credit and store cards.

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