US consumers are floundering in a sea of debt. The economic crisis, the loss of jobs, the increased cost of living and poor spending habits have combined to form a thick morass from which consumers find it difficult to extricate themselves. Like an anchor, these debts are dragging consumers down into bankruptcy and financial ruin. In an attempt to save themselves, many consumers turn to debt elimination companies. These companies often offer "debt consolidation" loans or promise to work with creditors to reduce the burden of debt. However, many of these companies are not what they seem.



In many of these cases, the "company" requires consumers to pay a large, upfront fee for their services. If a loan is in question, the company may require an enormous down payment on the loan. Consumers pay these fees and put down these down payments, only to find that the promised help or that needed consolidation loan never materializes. Other companies may offer some assistance, but do not provide consumers with the information mandated by federal law, which states that anything a debt elimination company can do, the consumer can do, as well, at no charge.

While some debt counseling and debt consolidation services are quite legitimate, the Internet is rife with imposters, waiting with baited breath to part unwary consumers from their hard-earned income.

How does a consumer recognize these problem entities?

· A debt consolidation company should tell consumers upfront that they can do everything the company can

· A debt consolidation company should not charge hefty, upfront fees

· A debt consolidation company should never require consumers' vital financial information before sending any "free" information

In addition to these false "consolidation" companies, consumers should also be alert to the threat posed by unscrupulous offshore entities posing as lenders. These "lenders" offer substantial loans to help consumers consolidate and pay off their debts. However, in return, they demand enormous sums, upfront. Once the down payment is made, the consumer never hears from the company again – they fall off the map. Consumers around the US are urged to contact the Better Business Bureau before doing business with any debt consolidation company.

Of course, while scams and frauds do exist, consumers have many options available to them to help rectify their debt problems. The first step is to contact a debt counseling service. These services assist with teaching better spending habits and provide consumers with a roadmap to rebuilding their creditworthiness and regaining their buying power. In this modern age, a good credit rating is vital to happiness and comfort. Consumers would do well to learn these correct spending habits, in order to live within their means and utilize credit as the powerful, yet limited, tool that it is.

Other options involve consumers contacting creditors on their own. As mentioned, anything that a consolidation or "credit repair" service can do, consumers can do for themselves, at no cost. Contacting creditors and negotiating a lower interest rate may be more time consuming than other options, but often results in better payments and reduced interest fees. Creditors always prefer to receive less money than for a consumer to file bankruptcy, which often leads to no payments for the creditors. Thus, most creditors are willing to work with consumers in a reasonable manner. However, if the situation is particularly untenable, consumers are able to file bankruptcy, though this should be used only as a last resort, simply because this filing has such long-reaching ramifications, which can haunt consumers for decades to come and impinge their ability to rebuild their credit.