Find the benefits of credit card debt counseling – Call 888-981-4979

How to Avoid Debt Consolidation Scams

How to Avoid Debt Consolidation Scams

Drowning in credit card debt? We can get out you out of debt fast! Don’t believe it. Scam artists are taking advantage of the uptick in people who are in trouble with their credit card debt thanks to the economy. These people reach out to debt relief companies in hopes of getting the assistance of a financial professional with a solid plan for their future. Instead, in every debt relieve service, they now have to be cautious of scammers who would leave them in worse shape than they started in.

Learning to avoid debt consolidation scams is not as tricky as you might think, here are some helpful hints.

Know the Scams Debt Consolidators Use:

Too good to be true interest rates

If it sounds too good to be true, it is. The rate may in fact be ridiculously low but if they are you can bet your will be paying charges that are being hidden now and will be revealed after you’ve signed a contract.

Requiring personal information before a contract is signed

There is no reason for a company to request or receive information like your social security number or other identifying information before you enter into a contract with them. Providing this information may lead to a stolen identity.

Unethical advice

If they suggest you do something you know to be wrong or is just contraindicated stay away. They may suggest you not contact the credit bureau, or that you stop paying your bills at all and put the money into a trust fund. This is not good advice. Some may even suggest you open a line of credit in a different name to start with a clean slate.

Super high fees before services are rendered

The Credit Repair Act does not allow debt consolidation companies to require payment before services are rendered. Do not do business with a company that requests payment above the percentage based on the balance you owe.

Avoid Debt Consolidation Scams by Doing Your Homework

  • Look into the company’s Better Business Bureau accreditation with the Better Business Bureau. BBB accreditation is only given to legitimate businesses.
  • Look into past success and failure of their debt consolidation attempts and pay attention to any consumer complaints.
  • Get online and on the phone, check with friends and family members that may have used the company before you or search online review sites.

Ask Questions to Avoid Debt Consolidation Scams

  • How long will it take to be debt free? (3 to 5 years is the norm)
  • How do you determine my monthly payment and what will it be? (Don’t sign up if you can’t make the payments.)
  • Approximately what will I save versus my current payments? (Free estimates are frequently offered by reputable debt consolidators.)
  • How do I know all of my creditors will be paid correctly and on time?
  • Do you offer other debt consolidation options? What are they? (A company that offers credit counseling or settlement plans as well as debt consolidation will have less reason to try to corner you into a single type of program that may not be the best fit for you. A company with options will have more interest in getting you debt free and less interest in forcing you into a singular program to get your business.)
  • What types of reports will I receive during the repayment period and when will I get them? (You will need to get highly detailed, completely accurate statements in a timely manner at regular intervals to be certain your creditors are being paid as promised and your money is being spent in the manner you anticipated.
  • Will enrolling in this debt management program have a negative effect on my credit score? (If they tell you they can remove negatives from your report they are lying.)
  • Before sending a single payment to your debt consolidators speak to each of your creditors to ensure they will agree to the terms of the consolidation agreement.

Avoid Debt Consolidation Scams with the following steps

  • Read reports carefully. Check each thing that was promised to you, whether it was waiving late fees or reducing interest, if must be clearly stated in your reports. If it isn’t in writing it isn’t binding so get it written.
  • Make your payments on time and do spot checks with your creditors to ensure their records match your monthly statements from your debt consolidation company.

Take your time, shop around for the right company for you. Compare each offer with the checklists above, possibly making copies with space to write in responses. You can find help from good people at good companies who truly want to help you solve your debt problems. Do not be discouraged with the information above, just use it as a tool to prepare yourself to avoid debt consolidation scams you will be on your way to financial solvency.