Debt consolidation does have its unsavory side. It is not hard to see that the numbers of debt consolidation firms has increased over the past three years. On the Internet alone they were amongst the major advertisers and now they out rank the household names with television commercials. Unfortunately a few of these so-called debt consolidation firms are being found guilty of illegal practices, especially in reference to the use of ‘non-profit'. More and more are facing lawsuits from the FTC, the IRS and countless attorney generals nationwide.

One such firm is not only subject to a federal suit, but action by the FTC and now five separate state lawsuits against it. The firm even went as far as declaring bankruptcy, but they have not stopped operations. In fact they merely changed their names and resumed operations under as different companies. This was one of the worst so far.

Not surprising though is the fact that a lot of companies are no longer referring to themselves as ‘debt consolidation companies' because of the bad media attention this case has spawned. With that in mind you need to be cautious and avoid companies that hide under the guise of debt negotiators or debt settlement firms. Some of them are in fact the same type of companies who are still acting illegally.

You are best to do background checks on debt consolidation firms, or any company, through your consumer protection agency and/or your local Better Business Bureau. However, even the feedback from the latter is not reliable. A good rating with a business bureau means nothing. More than 75% of complaints against any company does not impede the ratings if a resolution has been found. Also note that the Better Business Bureaus have no jurisdiction to investigate any complaints against debt type consolidation firms and definitely not authorized to make any resolutions.

The best advice that can be given is to simply avoid debt type consolidation firms that have registered addresses in either Florida or Maryland states. Sadly these states have no regulations to govern them. With so many varied firms available offer these services nationwide you may choose to air on the side of caution and look in other states, which could save you a fortune and the inevitable concern over any dealings with such companies of ill-repute.

There are some websites that deal with customer reviews, specifically geared towards debt consolidation firms. It is worth looking into as you can get useful feedback from those who are or did use the services of a company that you may be considering signing up with.