It was of course from some company that was trying to sell a debt management plan. At the time, these were still fairly unusual. The idea was (and still is) that you would turn over all your credit card bills to this company, they would negotiate on your behalf and get you a better deal and lower payments. I remember one such company saying how “we can get the creditors off your back.” Now, you have to remember that all this was back when the economy was booming and the Great Recession was something no one could have imagined would occur. Today, there are thousands upon thousands of debt management companies who offer to help you through debt counselling. They all have the same basic concept behind them, that they will negotiate on your behalf. The trouble is that whenever there are desperate people, con men will move in alongside them and try to steal what little they have. These vultures will basically prey on the weak and try to get you to “sign up” with them, charging upfront fees sometimes as much as $1,000 and promising to take care of everything.

People scrape the money together to pay them, thinking the nightmare is over. But it isn’t. The nightmare is just beginning. These guys will take your sign up fee plus any other money they can milk from you and whistle all the way to the bank. By the time you realize you’ve been ripped off, it’s too late. They’ve closed up shop and moved on to the next mark. So how can you be sure to avoid such scams? It’s really not that hard. Just do what you would do if you were hiring someone for your business. Google them. Put the name of the company into Google together with the word scam and see what comes up. If they’re legit, the name will not get hits for scams. However, if you see people complaining about having been shammed before, watch out. You’re their next mark and you can’t afford to be wrong. This is your life and your credit after-all. No matter how much they sounded sincere, just move on to the next place. There are enough legitimate places to get debt counselling that you don’t need to hire any bogus debt management companies.

However, in other cases, especially in the phony commercial described above, these guys are the lowest of low: crooks who prey on the vulnerable. They will take money from you for a “consulting fee” and leave you holding your bills. How can you tell the difference between real debt negotiators and those who wouldn’t know a debt negotiation from a happy meal? Just follow these simple rules:

• Ask questions. I say this to everyone I meet who asks me about this. Ask lots and lots of questions. Make sure you nail them down on details. Don’t accept vague promises that it will all be okay. How many people have they helped? Do they have real live human beings you can talk to who they helped? What are some of the banks they’ve negotiated debts with? Are there banks that they know debt negotiation will be a waste of time with (Hint: there are some. Some banks will not deal with these guys and they will only deal with you directly. If they claim there’s no such thing as a bank they can’t talk to, hang up and look elsewhere.).

• Talk to people. Ask your friends what they did. These days, there’s no shame in admitting you’re having debt problems and need to find a debt negotiator. The Great Recession has hit everyone hard and your friends will understand. Find out who they used and if they were happy.

• Google is your friend. Check the company out on Google. Do they have reviews? Are there scam reports about them? The world is a different place now since everyone can look up this information. Use it and you will find answers to your questions.

• Don’t be afraid to walk away. There are thousands of companies out there that do this kind of thing today. If you don’t feel comfortable with one debt negotiator, just find another one.

Basically, what a debt consolidation plan does is to well, consolidate your debts. This is a program where you get all your various credit cards together, you arrange for them to be paid by one central company that takes care of paying them and then you pay that one company. It can be done in several ways:

• New credit card. This is less often done these days, but some credit cards will still let you consolidate debt onto them from other cards. The key here is that you cut up the other cards so you don’t get into trouble again.

• New mortgage. Again, with the problems in the housing markets, this is harder to find as well, but you can refinance and get the money to pay off your bills, even today. Just be sure that you follow the advice above and cut up the cards so you don’t end up back where you were, but with a larger mortgage to boot.

• Debt Consolidation Counselors. These guys will negotiate on your behalf with you credit cards and other creditors and they will arrange a lower payment for you. It doesn’t always work though and you do need to watch out for con men. However, in general, this is a great choice and probably the best choice if you find some with a reputable debt consolidation plan.

However, sometimes advertising comes down to good old patriotism, as with American debt consolidation. I’ve been looking into debt consolidation programs for you, my loyal readers and I’ve done lots of Google searches. Today, I tried American debt consolidation and got 35,600 results. And that’s with the quotation marks (they narrow Google results by showing only the exact phrase instead of an article with those three words anywhere in it). Without the quotation marks, the total jumps to a remarkable 5,030,000. Yes, that’s over 5 million results. So let’s say you’re taken with the idea of using an American debt consolidator. How should you go about choosing one who will do the job for you effectively?

• Talk to friends. This is your first line of defense. Talk to your friends. These days, everyone is having trouble with paying their bills and they need to find debt consolidators, American or otherwise. Odds are, your friends can recommend someone they used or at least tell you whom to stay away from.

• Google, Google, Google! Check the company out. Google their exact name and the word scam. Then try the exact name and the word review. People will generally say what they think of a company and you should get solid results.

• Better Business Bureau. This is just another way to check them out. Contact the BBB and ask if any complaints have been filed against the company. It’s cheap (free actually) and easy and could save you all kinds of heart ache later down the road.

Good luck. I know what you’re going through right now is tough, but I promise you will get through it. It just takes some perseverance.

I’m not sure if this program is the one I really want to work with or not. I searched for ‘American Debt Relief’ reviews without success, but I did like what they had to say. This company is run by lawyers, not some guy working out of a boiler room in a call center. They don’t try to promise that they’ll negotiate your debt with your creditors. Instead, they offer to guide you through bankruptcy. Now I know what you’re thinking: bankruptcy is not for me. Either you believe there is still a stigma attached to it, or, like many Americans, you feel (justly I think) that you should pay the debts you incurred. Or maybe you believe you’d lose your home or car if you declare bankruptcy. Whatever the case may be, let me offer you some basic information about bankruptcy:

• It is not a legal way to cheat. Bankruptcy has serious consequences. It stays on your credit record for ten years. It will affect your credit for years after you finish the proceedings. In addition, your bank figured in the possibility of you declaring bankruptcy when they gave you a loan. They understand that sometimes debts can become overwhelming and that the only way to get out is a clean slate. While they may not like it, they accept it as part of doing business.

• Bankruptcy does not have the stigma it once did. It used to be that admitting you were gay, admitting to having had an affair and admitting to having declared bankruptcy were three of the worst taboos in American culture. These days, gay couples adopt children and can marry in several states, adultery is understood as something that may happen but that couples get through and move on from and Bankruptcy? Bankruptcy is something that you did because you had a problem and needed to find a way to get past it. It’s not the end of the world and people understand, especially with the terrible economy that you may need to do it in order to make it through tough times.

• It doesn’t have to mean dropping all your debts. Bankruptcy can also include arranging a payment plan for your debts, similar to a debt consolidation program, but in this case, the courts will force the bank and your other creditors to accept a compromise. You can then go in with a clear conscience, knowing you paid your debts in good faith, but also getting the clean start you desperately need.

These are all creditors, whether it’s the bank, the electric company or the local newspaper, they all want one thing from you: money. There’s just one tiny little wrinkle: You don’t have enough to give them. With near 10% unemployment and hundreds of thousands more underemployed (i.e. working for fewer hours than they want to, or working for far less than they need in order to make an adequate living), more and more of us are falling behind on our debts. However, there is a solution to the nightmare. It’s called a debt management consultant. So what do debt management consultants do?

If you get yourself a reliable debt management consultant, they will do a variety of things to help you with your debt:

• Help you manage your money better. The first thing that a debt management consult should do for you is to help you make and stick to a realistic budget. You lost your job and you’re living on various part time wages? Yeah, it’s tough, but there are solutions to every problem. You’ll need to adjust your lifestyle, but it can be done and your debt management consultant will help you do it.

• Negotiate with your creditors. No, they will not get your debt settled for 35 cents on the dollar. And by the way, if they do tell you they can do that, run like hell – you’ve found yourself a con man. However, they can help you craft a strategy together with your creditors to lower your monthly payments, usually through lower interest rates so that you can try to catch up.

• Counsel you on managing your debt in the future. A quality debt management consultant will help you to manage your debt not only now, but in the future. They will do that by showing you when it pays to use your credit cards and when you’re better off paying cash (hint: buying your groceries on credit is a big no no. That will only sink you deeper and deeper into debt since they’re gone and consumed long before you pay for them).

Well, let’s assume you’re like the typical American and you have around 6 credit cards, each one of them closing in on the maximum. In total, you may owe around $8,000 on all of them. You likely have no savings or very little savings and just before the whole credit crisis hit, maybe you decided to refinance the house in order to put in a pool, or a new bathroom. Or maybe you had decided that the rising value of your home meant you could take finally that trip to Rome that you’d always dreamed of. Whatever the case may be, today, you’re drowning in debt and you may be unemployed or if you are employed, you may be making significantly less than you need to be earning because your company forced everyone onto a four day work week or to take a 10% pay cut. Hey, you’ve still got a job right? Well, if you’re in that situation, you may be a candidate for a debt relief clearinghouse.

What these places will do is to contact all your credit cards on your behalf and negotiate a deal for you. They may be able to get lower interest rates for you and they may even be able to get the credit card companies to settle for less than the full amount you owe. Especially in this economy, the credit card companies are eager to work with such places so that they can get something rather than seeing a debtor walk away and not pay anything. However, you need to be sure to pick a debt relief clearinghouse which will actually do the job and not just walk away with your money. Here’s a few tips on how to do that:

• Look for companies with a history. A successful company will have been in business for years and will be able to prove it.
• Check with the Better Business Bureau. If the company you want to work with has scammed others, odds are that they’ve been reported.
• Be prepared to walk away. If the company is just eager to get you to fork over your cash, then walk away. A legitimate company will take the time to tell you exactly how it works, will have literature for you to study and will not pressure you to sign right now. And on that same vein. . .
• Beware of incredible claims. If the company you’re working with is trying to claim that they can get you a deal where you’ll pay just 35 cents on the dollar, run the other way. While it’s nice to believe that such a thing could actually happen, the reality is that most credit card companies do not want to settle for so little and it’s highly unlikely that the debt relief clearinghouse can get you such a great deal.
• Keep your wits about you. If it smells fishy, just walk away. There are enough legitimate places to work with that you don’t have to work with them even if they were recommended.

So what is a debt elimination program anyway? My guess is that we’re not sending a Steven Segal or Arnold Schwarzenegger type to eliminate the creditors I owe money to and frankly, while I’d love my credit card debt to disappear, It’s probably not going to happen. Instead, what places like this do is to create a program to eliminate credit card debt. Or they can eliminate car loans, or college loans or whatever you need to get rid of. The way they do is by negotiating with your creditors on your behalf. And just to be clear, we’re not talking about negotiations Bruce Willis style, at the point of a gun. These nice people will call your debtors on your behalf and explain your situation and try to make a deal for you.

Now in all seriousness, that last term is super important. “Try.” If a company claims they can craft a credit card debt elimination program for you and it is 100% guaranteed, walk away, they’re scamming you. Equally, if they ask for money up front, make sure they provide a money back guarantee if they can’t help you. Get it in writing.

The reason I say all this is because you want to deal with a reputable company. Sometimes, in spite of their best efforts, your debt elimination program will simply not pan out because the company can’t get the credit card companies to agree to help out. Sometimes the credit card companies insist they will only talk to you. And sometimes, your only way to eliminate your credit card and other debt is through the bankruptcy courts. All this should be discussed and the company you work with should make it clear they cannot guarantee results and that they will refund your money if they do nothing at all. After-all, if you had money to waste, you wouldn’t be looking for a debt elimination program to begin with, right?

Stop using your credit cards. Yes, it’s tempting to whip out the plastic and pay for the groceries, but all you’re doing is adding to debt that you need to figure out how to pay for later.

Make a list of monthly expenses. Basically, what you need to do is to keep careful track of what it is that you’re buying. It’s amazing how the little things that you think you “deserve” can make massive holes in your budget. For example, even though that $4 latte at Starbucks sounds like it’s a nice deal, the reality is that they add up very quickly and will get you into trouble. Even the candy bar at work to help you get through the day is an expense that can be cut. Look carefully at everything and allow nothing to be sacred. That said. . .

Don’t make yourself miserable. Yes, you need to follow these tips on debt consolidation in order to get yourself out of debt. But if you cut too far, you’ll make yourself so miserable that you’ll end up like someone on a diet who binges because they just can’t take it anymore. Instead of a candy bar every day, try a candy bar once a week. The latte at Starbucks can be a once a month indulgence instead of a daily one.

You don’t need to use a debt consolidation service in order to get your bills renegotiated. If you call your credit card company and explain that you’re having problems with paying your debt, they will generally listen and try to work with you on getting you a payment plan you can manage.

If you choose to use a service for debt consolidation, make sure they’re legitimate. Ask questions, beware of claims that are too good to be true and check with the Better Business Bureau to see if complaints have been filed against them.

Good luck. I know the economy is tough right now, but if you follow these debt consolidation tips, I do believe that you can get through it.

If you’ve followed the news, you’re probably aware that money is tight these days. The banks don’t want to lend to anyone who has bad credit, but those are precisely the people who need to find a way to refinance their loans. There are some places that will refinance for you, but the terms are sometimes confusing and sometimes seem like they might not be a very good deal. So what should you take into account if you need to refinance with bad credit?

• Ask a lot of questions. Do not be afraid to ask questions from the loan officer you are talking to. Many of these people are fast talkers who are paid to get you to sign the papers as quickly as possible. Therefore, it is your job to hold back and not make any rash decisions. No matter how bad your situation is now, it could get even worse if you sign a bad deal.

• Take the time to think it through. It sounds tempting that you’ll reduce your monthly mortgage payments by $200. But remember that doing it will ultimately cost you thousands of dollars more since you’re creating a new loan with longer terms and paying more fees. This might be a good deal, especially if it means that you can stay in your home. However, you need to ensure that you will be able to afford that new payment and to decide if it’s worth adding thousands of dollars to your expenses.

• Talk to a lawyer. Most people want to believe they can understand the documents themselves. However, you need to speak to a lawyer who understands these things and who works for you to make sure you didn’t miss something. Even though it will add to your expenses, ultimately, you’ll be happier if you do it and your bad credit finance loan will not feel like such a burden if you understand what you’re getting into.