4 More Debt Consolidation Red Flags
Debt consolidation is a last resort for many people who are way over their heads in debt. The option has become an increasingly common way to lower interest payments and finally pay down out-of-control debts; however,there are some bad people out there that are taking notice of this concept.
Credit consolidation scams are on the rise as more individuals find themselves in need of services. These scams set up a fraudulent company and take advantage of people during their time of need. Several of these companies require an absurd amount of money as an upfront payment, promising miraculous debt repayments. Others claim to be non-profit organizations either working for charity or the government.
If you find yourself considering debt consolidation, be wary of some of the following:
If They Use High Pressure Sales Tactics
Keep an eye out for high pressure sales tactics that make you feel like you need to sign immediately. By the same token, you should be aware of anyone who offers guarantees. Learn this now: in the game of debt consolidation there are no guarantees because of the volatile nature of credit laws. Anyone who promises one is probably a part of a scam.
The road of debt consolidation takes a lot of time and patience. You cannot expect miracles, and anyone who promises them will probably take advantage of you.
If They Have Questionable Methods
While there are several different ways to consolidate your debt, some methods are just not ethically acceptable. Before embarking into debt consolidation make sure to research your options. That way, if you are thrown a curve ball – like a suggestion that you take out another loan to pay off a debt – you’ll know when to just say no.
If They Charge Upfront or Hidden Fees
If the debt consolidation company you are looking into requires an upfront payment, you will be better off walking out the door. Payments are based on how they have been able to handle your credit consolidation, and they typically only require a percentage of the money you pay.
Before signing a contract you’re also going to want to look out for monthly service fees, sign up fees, a service fee based on the portion of total debt (they can get expensive) and hidden and voluntary fees that don’t make any sense. All of these things should be clearly explained in the contract, so take the time to read it over thoroughly before diving into anything.
If They Say They’ll Make Your Payments Now
There is a process these companies have to go through in order to take over your payments. This process may take some time and credible companies will not guarantee an immediate start.
Make sure to keep making payments to your creditors until you are positive that you have found a credible company and they confirm that they have taken the reins.
If you want to know which companies are worth it, you have to go straight to the source. Check with your credit card company and see if they work with any consolidation services. You can also check with the appropriate government entity, as most countries require that legitimate debt consolidation services be registered.
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