According to the recent statistics provided by the Federal Reserve, the American population is suffering from consumer debts worth $1.6 trillion ever since economic recession enveloped the United States. As a result, many debtors are flocking credit-counseling and debt consolidation agencies with the hopes of having a more manageable financial life.

If you're in debt and you are planning to get the services of a debt consolidation company, hold your horses. Not every company that promises you with financial liberty is a sure deal. There are many credit debt consolidation companies which are only after the consolidation and counseling fees that you will offer.

1. Targeting the Vulnerable Debtors

Many debtors are falling prey to the traps of fraudulent debt consolidation companies. They promise to cut deals with the creditors and help their customers get a 40% to 60% reduction in interest rates. Some even claim that they can get the creditors to agree with waived interest rates and late payment fees. Others go a bit further by claiming that they can get reductions for the principal amount of the loan. However, most of these claims never go beyond being spoken words.

Unfortunately, regulators failed to realize how susceptible to abuse the credit debt consolidation services can be. It was only now that they have been receiving many complaints from the vulnerable consumers that they are becoming conscious of how threatening consolidation scamming has become. "Consumers sent their money off faithfully, and their creditors weren't paid," narrates William N. Lund, Director of the Office of Consumer Credit Regulation in the District of Columbia.

Clearly, the authorities didn't anticipate how prevalent scams can be in this industry. "We had no idea that there was a potential for such a rip-off in this area," notes Bennett Rushkoff, an attorney in the Office of the Corporation Counsel of the District of Columbia's legal agency.

2. Making the Right Choice

The secret in succeeding with credit debt consolidation programs is to find the right company to deal with. Aside from checking out customer reviews and recommendations made by finance experts, debtors should do their research and check the affiliations of a company.

Sarah Leineke, president and owner of Nation-Wide Debt Settlement which is based in Phoenix, points out that "The more affiliations a debt-settlement company has, the more reputable they're going to be." So before plunging into a consolidation deal with any company, debtors should check with the Better Business Bureau and find out if the company is affiliated with the International Association of Debt Arbitrators, the Association of Settlement Companies or the U.S. Organizations for Bankruptcy Alternatives.

Apart from researching on the affiliations, the debtors should also try the free debt counseling services. This way, they will be familiar of how the debt consolidation company will go about their job of helping their debt-infested clients.

3. There is Hope!

Experts and consumers note that not all credit debt consolidation companies are troubled. There are really many companies who have successfully helped their customers achieve financial liberty.

According to Rushkoff, the best consolidation and counseling agencies usually allow their clients to take a more active role in the process. Reliable companies devise detailed repayment plans for each client. They also demand more face-to-face meetings and they provide free information or seminars that aim to develop the finance management skills of the debtors. The prime indication is that their fees are also more reasonable.