While the process is not without its pitfalls, PBS expert Michelle Singletary says that credit counseling and debt consolidation can help financially strapped U.S. consumers battle their way out of trouble without damaging their credit scores.
Singletary urges consumers in the market for credit counseling services to thoroughly investigate the companies that they are interested in doing business with, as less-than-competent firms can actually damage a person’s prospects of getting out of debt if they send payments to creditors after due dates, incurring late payment fees. This can keep unfortunate consumers in a vicious cycle of debt.
However, according to Singletary, professional debt management agencies can offer lifesaving benefits to consumers in such financial trouble by negotiating with creditors from a stronger position than the consumer alone would be able to.
Other experts have warned against working with debt management agencies that demand exorbitant up-front fees or guarantee lowered interest rates for future loans. Such agencies are likely engaging in deceptive practices and should not be considered legitimate options for debt reduction.