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Best Debt Consolidation Companies

Best Debt Consolidation Companies
Daniel Cohen
UpdatedApr 9, 2024
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    4 min read
Key Takeaways:
  • Are each company's claims reasonable?
  • Is the company accredited?
  • How long has the company been in business?

10 Questions to Help You Find the Best Debt Consolidation Companies

Readers often ask Bill, the advice columnist, how to find the best debt consolidation companies. We assembled his best answers here in a summary, and cast them as the Top 10 questions you need to ask each debt consolidation company. Your answers these questions will help you learn what the best debt consolidation companies have in common.

Question 1: How Long Has the Debt Consolidation Company Been in Business?

A long history is good for two reasons. First, a debt consolidation company with long history will employ experienced people who demonstrate an ability to negotiate and work with a variety of creditors effectively. Second, fly-by-night companies have, by their nature, short histories. On the other hand, long-lived companies have a track record and culture of customer service that will probably serve you well.

Question 2: Is the Debt Consolidation Company Accredited?

Look for a service provider that is a member of an industry association. For credit counselors, look for membership in the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC). For debt settlement, look for a membership in the American Fair Credit Council (AFCC) or International Association of Professional Debt Arbitrators (IAPDA). These groups do not guarantee their members will provide good service. However, membership in an industry group indicates some longevity in the business, and shows the company promises to follow industry best-practices. For example, NFCC members are audited every year.

Question 3: Are Employees Accredited?

Look for a service provider that hires employees who are themselves IAPDA members. Again, just because a person is a state-licensed doctor, lawyer, plumber is not a guarantee the person gives good customer service. However, membership in IAPDA is a sign the counselor takes their job seriously, has undergone training and passed a test. Given the choice between a servicer provider that is a member of industry associations and hires IAPDA counselors, and a service provider with no industry membership, spend your time looking at the one with the memberships.

Question 4: How Long is a Counseling Session?

Expect a 30-minute or longer counseling session where the debt consolidation company reviews your finances and makes recommendations that best meet your needs. It probably took you several years to get into your financial situation, so it will take some time for a counselor to help you find the best way out.

Question 5: Are the Fees Reasonable?

High up-front fees for credit counseling are a warning sign. Credit counseling fees should not exceed $50 monthly. Debt settlement firms may not charge a fee until the first debt is settled.

Question 6: Do the Disclosures Set Realistic Expectations?

Debt consolidation companies should set realistic expectations. The disclosures should explain both positive and negative aspects of their services, including

  • The impact the service will have on your credit score.
  • Services rendered
  • Fees
  • Procedures

Each of these should be presented in a written form to you before you sign a contract. If a debt consolidation company cannot answer your questions or provide you with written documentation of procedures and policies, move on.

Question 7: Is the Debt Consolidation Company Using High-Pressure Sales Tactics?

Legitimate offers do not have a 24-hour or 72-hour expiration date. If a debt consolidation plan is right for you today, it will be right for you tomorrow. Take the time to choose the right solution for you and not the person selling you their solution. Do not succumb to pressure to sign up today to lock-in a great deal.

Question 8: Is the Offer a Quick-Fix?

The offer sounds amazing: "With one simple (fill in the action here), you can eliminate your debt." The truth is much more complicated. Some hucksters promote hard-money loans to people who are in bad shape financially. Oftentimes, these loans are pitched to homeowners, the result of which is the homeowner losing their property. Also beware so-called "debt elimination" schemes that rely on confusing legal claims that you can avoid your debt pain-free. All debt consolidation strategies come with built-in positives and negatives, and someone promising a pain-free quick-fix is not telling you something.

Question 9: Am I Asked to Pay Mandatory ‘Donations’?

Many debt consolidation companies are non-profits. The unscrupulous add a monthly fee — often 10% or more — or a hefty up-front fee to your debt. If you can afford the unnecessary extra 10%, you are better off negotiating directly with your credit card company to lower you interest rates and adding the extra fee to your payments.

Question 10: Is the Offer Over-Reaching?

Debt consolidation companies cannot repair your credit report, improve your credit score, and reduce your debt simultaneously. Every debt resolution strategy has short-term consequences on a person's credit score. In time, a credit score will improve as the problems on your credit report receive a lower weight in your score calculations. In other words, the old saying, “If it sounds too good to be true, it probably is,” applies to debt consolidation companies.


Ask each of your debt consolidation candidates these questions. The best debt consolidation companies differ in the details of how they operate, but all have the same best practices in common. None use high-pressure sales tactics. All have industry accreditation, and all share a complete list of the positives and negatives of their debt resolutions strategies. Answering these 10 questions will lead you to the best debt consolidation companies.

Dealing with debt

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Delaware credit card delinquency rate was 4%, and the median credit card debt was $365.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



JJulia Reynaga, May, 2019

What is the best company to choose for a debt consolidation loan?

DDaniel Cohen, May, 2019

Julia, there is not one "best" debt consolidation loan company. Different lenders target specific types of borrowers. For instance, if you have excellent credit, you would seek a different lender than if you have only fair credit.

I recommend that you comparison shop, using the Rate Table above. You will see offers from different lenders licensed to offer loans in your state, then can speak with one or more of them.

MMichael DeMarco, May, 2019

Looking to pay off a personal loan and credit card debt. How do we find the right consolidation loan program?

DDaniel Cohen, May, 2019

The best way to find the right consolidation loan is to shop around. Please visit this page and use the rate table you will find if you scroll down a wee bit. Fill in your Estimated Credit, Zip Code (Zip may automatically fill in), the size of the loan you seek, and choose a loan purpose from the drop-down. You will see loan offers from lenders, if any are available, with no effect on your credit score.