Beware Of Debt Consolidation Companies
Educating yourself on the debt consolidation process is one of the best ways to keep from being scammed by dishonest debt consolidation companies. There are warning signs that can help keep you from falling prey to one of these companies.
Quote Unusually Low Monthly Payments: A debt consolidation company works with the creditors with the intention of lowering your rate of interests. The creditors would have already predetermined how much could be reduced from the rate of interest. It means that all consolidation programs would get you the same rate of interest. But from 2004 the creditors have declined to accept the reduced minimum monthly payments. Companies who promise you less monthly payments may give you low figure. But eventually they will increase the amount once you are pulled in to the program. Therefore instead of comparing the monthly payments, you are advised to request the company for fees on their service.
Insist On All Debts Being Included – When companies insist that all of your debt’s be included in a program, it isn’t because they are about your financial situation. Some debts, credit union loans for example, are ineligible for lower monthly rates, while other debts, such as student loans, may already be at a low interest rate. The truth is these companies stand to gain more in fees for handling more accounts, and try to do so by insisting you include all of your debts in their program. Consider your debts first, and chose which of these debts you feel have a better chance of being eliminated before you enter a program.
Charge High Upfront Fees: The prevalent scam is to charge high upfront fees, that is, up to thousands of dollars in the name services. There are companies who promise to pay back fees on completion of the program. But very few really complete the program. Their sole motive is to grab money from the weak. Let us not fall prey on them.
Flat monthly rates are charged by non profit debt consolidation companies, as these companies are often subsidized by financing companies. Companies taking a profit from debt consolidation services will usually charge a competitive fee along with their flat monthly charge.
Offer Debt Settlement And Other Services: There are companies who promise you to offer other services like debt settlement, credit repair, and other programs. They are all sugar coated venoms. They will only swallow your money and you will face utter disappointment. If you really need to make a debt settlement, you have other valuable option, that is, declaring bankruptcy. This will be a better financial choice, I would say.
Request Account Numbers First: You must be highly suspicious of any company that asks for your account numbers, social security number, or other personal information before providing a quote. If you give all these details just like that it will lead to identity theft and you will be the looser. Simply providing name of the creditor, balances and rate of interest will be enough to get an accurate quote.
Layla Vanderbilt is the webmaster for a leading website that offers for debt consolidation advice and guidance.
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