Looking At Debt Consolidation Scams

There is no doubt that debt is on many people’s mind today. As such, many are seeking answers to their financial problems. To fill that void comes debt consolidation companies. Even though many of these companies are on the up and up, others are simply in it for the money. Your money! Before you look into debt consolidation, make sure the company you are thinking of doing business with is not a scam artist.

As the debt situation has increased significantly in recent years, more and more independent debt consolidation agencies have popped up to take advantage of the financial situation. Unfortunately, the business has attracted many scam artists as well. Whenever something good comes along there is always a downside. Crooks have found a way to turn your desperation into big bucks.

If you have received something in the mail or over the Internet promising to help you consolidate your debt, don’t just take them at their word when they tell you they are only there to help you. Never, never hesitate to ask a few questions of these people before you decide to do business with them.

Try to put yourself in this worst case scenario before doing anything else:

Let us imagine for a moment that you have a large debt load. You desperately want to get out from under this mountain of debt, so you seek help from one of the debt consolidation companies that calls your house. They tell you they can get your debt settled for a fraction of what you actually owe.

So you decide to work with them and you enroll in one of their debt consolidation programs. According to the company, they were able to get your creditors to agree to accepting one-third of what you owe, paid over a six month time frame. You faithfully make payments, starting with a lump sum at the beginning.

You believe everything is fine until, one day you start getting calls from all your credit card companies, and they want their money! Now you’re confused because you’ve been making payments to this agency; or so you thought. When you call the toll-free number for the agency, all you get is an answering machine!

Bottom line: you were scammed out of all that money and still owe the debt!

Don’t let this happen to you. If you need help and are serious about working to lower and eliminate your debt, ask these questions should anyone come knocking at your door or calling you on the phone:

1. Ask point blank what their company’s name is and what their references are. Any company representative that is not willing to give you thorough information about what they do is a glaring red flag. Any company that wants to do honest business shouldn’t mind telling you what you want to know. Also, if they imply that they can get information removed from your credit report, slam the door. It’s a lie.

2. Ask what the cost of doing business with them is going to be. There will be a charge but it shouldn’t be a substantial one. The initial consultation is usually free or a low fee. Beware of hidden fees for processing and other things that can be tacked on.

3. Find out how many different services they offer to help you with your debt situation. Any company that only pushes debt management programs in lieu of credit counseling or payment plans could be up to something. Maybe they are getting money to push that program. You don’t want that.

Finally, don’t fall for the hype. In fact, check with the Better Business Bureau to see if that particular company has been investigated. Also, keep in mind this final tip: anyone that guarantees a debt reduction or offers help with your credit report is out for your money and should be avoided like the plague.