It is important to understand that debt management companies and credit counseling services are very different from each other. Both of them offer financial advice, but a debt management company requires the consumer to deposit a set amount of money each month to pay towards their debts. The debt management company then distributes those funds to the various creditors. 

Choosing the Best Debt Management Solution for You

The laws of many states require that any debt management group has to be non-profit before it can have the authority to operate. Thus you need to check a debt management group with the Better Business Bureau to make sure the company does not have customer complaints issued against them for its debt management practices. A debt management group should also offer a free consultation for potential customers to come in and discuss their situation without any obligation. For your protection avoid working with debt management companies that are new or are less than a year old. These debt management companies are more likely to commit mistakes and you won’t be able to find out able how reliable they are. 

If a debt management company is established and does offer free consultation pay attention to the types of questions they ask you during the consultation. If an agent of a debt management group doesn't ask you about your financial situation or background and he or she focuses straight in on when you can start making payments take this as a hug red flag -- the debt management company is more interested in getting your money than in helping you. They should be willing to listen to your concerns as well as answer any questions you have. Your ideas and preferences should be included in the plan that the company designs for you. You also need to make certain the debt management group is not in any way affiliated with any of your creditors because it places them in a compromising position when it has to work with both sides of the issue.

Most debt management companies will offer various testimonials in their literature and on their website. However don’t take the company's word for it; look for personal opinions and reviews on the Internet. You can also ask them for references that you can follow up with. 

Are You Dealing with the Wrong Debt Management Company?

You may end up working with a debt management solution that simply does not meet your particular needs. Trust your instincts when you get such a feeling. You can investigate what is going on and make the decision to switch to another debt management company if you feel your intuition is valid. The company (or group) must be able to provide you with monthly reports that show how your payments have been allocated to your creditors. A debt management group should never negotiate anything with your creditors without your knowledge and consent. 

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