Do Your Homework On Debt Consolidation Companies

By John Shumway

PITTSBURGH (KDKA) — Unemployed 29-year-old Craig McGonigle moved home with his parents near Kittanning in a desperate condition.

“I didn’t have any money and I was really scared because I had all these credit card bills,” he said.

Bills have no pity, so as he tried to get his car hauling business going he signed on with a debt settlement company.

Initially he thought it was the best move.

“They make you feel real good,” he said. “They’re like, ‘We’re going to take care of everything, you don’t have to do a thing we’re going to help you through this,’” says McGonigle.

The Better Business Bureau says debt settlement is the quicksand of the debt help industry.

Often times people who seek the help of a debt management company end up with an even more damaged credit rating and owing more than when they started. Any debt forgiven by a creditor is taxable and creates a major red flag on your credit report.

McGonigle says the company he used only intervened with one of his creditors and he wound up losing close to an additional $3,000.

Becky Maier, of the Better Business Bureau, says before you sign anything check out the company’s BBB rating.

“Do they have an A+ rating or an F rating with us?” she said.

Maier says four companies soliciting clients in Pittsburgh area currently rated “F” by the BBB:

Credit Answers — F
Debt Settlement USA — F
Debt Professionals of America — F
U.S Debt Relief Incorp. — F

“You want to contact a non-profit credit counseling agency,” Maier said.

Non-profit debt management companies work with creditors to lower interest rates, stop over-the-limit fees and put the client on a manageable three to five year plan.

You will eventually pay off all the debt you owe, but Maier says you need to understand it’s going to take time.

“Most people don’t end up in debt overnight and you can’t get out of debt overnight,” she explained.

And all the experts say no payoff plan will work alone. Financial counseling and planning is crucial or the payment plan is a waste.

“You have a lower payment and think, ‘Hey I can spend more,’ so now you’re going to out and create the same problem that got you in debt in the first place,” says Financial Advisor Rick Applegate of First Commonwealth.

If you would like to find a non-profit debt management service in our region, visit the National Foundation for Credit Counseling online at


One Comment

  1. rich says:

    yes they do make u feel good……you pay and pay but ur only playing them for there services…..and then the card company comes after you hard and fast

  2. Davis says:

    I think your report was very one sided! Debt Settlement is a person’s last resort to bankruptcy. Also, Debt Settlement companies tell their clients not to speak to their creditors so that they do not get harassed or threatened by them. NOT because they are doing something wrong with their money. You interviewed a customer, and people from Debt Consolidation, Debt Management, but not Debt Settlement. Why? How can you do a report on something but not interview anyone from that type of business?

  3. ismael quesada says:

    We all know how stressful debt and creditors calling can be. Well, there are some companies that can actually help you out of your situation without having to file for bankruptcy.

Comments are closed.

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