Debt Consolidation * Debt Consolidation Companies * Debt Elimination * Debt Negotiation * Industry Updates * Ameridebt

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Debt Consolidation Companies - Still as Ugly as They Used to Be

Last Update: July 29, 2011

This page is intended to provide updates on debt consolidation, debt negotiation and debt elimination companies. We try to keep this page as up to date as possible but it is hard keeping up with all of these sneaky companies.

Ever since I first started writing about debt consolidation companies, specifically Ameridebt in early 1999, I have watched these companies grow into big businesses, with some of them eventually being shut down by the Federal Trade Commission.

Eventhough the days of Ameridebt may be gone, there are so many other debt consolidaiton companies out there to take its place. The title "debt consolidation company" itself received so much bad press that some of these companies have repackaged themselves as "debt negotiation" companies or "debt settlement" companies. Are they as bad as debt consolidation companies? They are worse, using tactics that are not legal. Stay away from these types of companies.

Debt Consolidation Industry Updates

Update January 2011: The FTC filed lawsuits against 3 Debt Relief Companies for violating the new settlement laws. The lawsuits claim these companies made false promises to consumers such as eliminating collection calls and eradicating credit card debts quickly. The FTC fined these three companies 8.5 million dollars to settle these charges. It is alleged these companies did not offer any type of debt relief but were merely scamming people into calling the toll free number and then selling the leads for $50-$65 per lead. The FTC hopes this punishment will curtail furture debt relief scams.

Update September 2010: The best news regarding the debt settlement industry is here! That is, if you're a consumer. The FTC has just issued new debt consolidation regulations regarding what debt settlement firms are allowed to advertise, what fees they can collect and when and what disclosure they can make.

Update May 2006: Always thought the the IRS was your enemy? Well, everyone or thing has a good side. The Wall Street Journal (May 16, 2006; Page D2) published an article about the efforts of the IRS to investigate and revoke the non-profit status of credit counseling agencies who were taking advantage of their non-profit status to take advantage of consumers. You can see the list deletion here. (not all are credit counseling agencies) For a complete list of the efforts currently underway to identify these companies, click here.

Update March 2005: The FTC is shut down Ameridebt! http://www.ftc.gov/opa/2005/03/ameridebt.htm

Update November 2003: AmeriDebt had the distinct honor of being the first credit counseling company to have a federal lawsuit filed against it. The FTC and five individual states filed separate lawsuits against the company. After declaring Chapter 11 bankruptcy in November 2003, AmeriDebt is no longer in business. Crying over the death of Ameridebt? Rest assured, they live on - this company had already morphed into so many other companies that they are most likely around in some form.

List of Debt Consolidation Companies We Don't Recommend

Many debt consolidation companies are in hot water these days: they are being sued by numerous attorney generals, the FTC and the IRS is investigating their supposed "non-profit" status. We recommend against doing business with any debt consolidation company, but if you really feel you want to risk your credit and money you don't have, check it out with your local consumer protection agency and the Better Business Bureau in the company's location.

Several debt management companies are also touting the fact that they have A+ ratings with the BBB and have a log showing their rating on their website. (There is a lesson here, it's good to complain to me, but why not also complaint to the BBB, your state attorney general or the FTC?) Most people don't go the extra mile when they have been taken by any company, preferring just to grumble. Others are so new that there hasn't been time to lodge complaints. Should you look up their standings anyway? Sure.

We've identified the following companies as being debt management companies, and because of the fact that they are debt management companies, we advise against them. Want more info? Here's a great article by the Consumer Federation of America.

Please note: Several debt consolidation companies have told their customers that if their name does not appear on this list, that it is a stamp of approval. Don't believe them! These guys change names so fast it's hard to keep this list up to date! Here is a list of all the companies about whom we've received positive comments.

• A New Horizon Credit Counseling Services
• A1 Debt Consolidation
• American Debt Consolidation
• BudgetPlanners.net
• Cambridge Credit Counseling Corp.
• CareOne Debt Relief Services
• Christian Debt Consolidation (or any name with "Christian" in it. Really - how scummy can you be to play the religion card?)
• Clearpoint Credit Counseling Solutions
• Consumer Debt Solutions, Inc.
• Credit Advisors
• Credit Solutions (which used to be called Credit Solutions of America) - The NY Attorney General filed suit against Credit Solutions of America for deceptive business practices and false advertising on May 19, 2009. Case is still pending. The company then morphed into Credit Solutions, which is NOT accredited by the BBB, and there have been 725 complaints filed against them in the last three years!
• DebtConsolidation.com
• Debt Busters
• Debt Free
• Debt Free America
• Debt Free Today
• Debt Help
• Debt Management Credit Counseling Corp (DMCCCorp.org)
• DebtManagement.net
• Debt Relief Alliance
• Debt Solutions USA - On 3/29/11 their BBB accreditation was REVOKED due to "engaging in activities reflecting poorly on the BBB or it members". This company was given a rating of "D-" by the BBB. They are also known as www.No2Debt.com.
• Debt Zapper
• Delray Credit Counseling
• DTS Financial
• Fast Debt Solutions
• First American Debt Relief
• Freedom Debt Relief - BBB reports satisfactory listing, but complaints about this company have been filed with them, though the BBB says they were resolved satisfactorily.
• Freedom Financial Network - We've received a nasty-gram letter from this company threatening legal action if we don't remove their name from this list.
• GreenPath Debt Solutions
• iDebtAssistance.com
• InCharge Debt Solutions
• Lighthouse Credit Foundation
• National Foundation for Credit Counseling
• No2Debt.com (aka Debt Solutions USA, see above)
• NovaDebt
• Pioneer Credit Counseling
• Union Financial Services

I would avoid any of the companies listed above or any other company that resembles them. Why? Because, in my opinion, they are ALL bad. Run, don't walk from them. Some of the companies above advertise prominently that they are non-profit, but others don't even bother to do that. Why is non-profit a convenient masquerade? Business Week did a great article on debt management companies on October 29, 2001, and found all kinds of nasty details about how non-profits can be highly profitable. For instance, the CEO of Genus was found to be making a over $300,000/year salary. AmeriDebt directed $2.2 million dollars worth of business to for-profit operations owned by officers of AmeriDebt.

One final note, since the states of Florida and Maryland don't regulate this kind of consumer service, watch out for any company doing business out of these states.

I get so many letters asking me which of these companies I would recommend. My answer: Stay away from ALL of them. Whatever they can do, you can do yourself. However, if you still feel compelled to seek one out, here is our tipsheet. If you are already enrolled in one, then here are some tips to get out. Again, be very cautious. Before you do business with any company, check it out with your local consumer protection agency and the Better Business Bureau in the company's location.

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