Beware of Consumer Debt Consolidation Scams

2007-03-08 10:33:40

( Financial )



Consumer debt consolidation provides you the chance to attend a consumer credit counsiling session to determine which among your debts you need or wish to settle. Consumer debt consolidations are designed to restructure your existing loans by combining your loans into one amount, establishing a longer repayment period and lower monthly payments.

Unfortunately, with the rise in the popularity of consumer debt consolidation schemes, fraudulent schemes were also developed to enable companies to collect more money than necessary.

Here are some signs to help you detect debt consolidation scams:

False debt consolidation companies will request you to pay for large monthly fees amounting to thousands in a guaranteed manner such as a cashier’s check or money order. Legitimate companies will only charge you a small fee for each creditor, depending on the number of loan accounts that you ask the company to handle. No other fees should be paid besides this.

Legitimate consumer debt consolidation companies have customer service hotlines. You should avoid any companies that do not make themselves available to assist if you have any concerns.

Offering very low monthly payment amounts is one creative way to lure customers. Low minimum monthly payments will most likely only be offered for a short time period; after which, the requested monthly payments usually increase.

In determining the debts you choose to settle, beware of companies that pressure you to combine every single debt that you have. Doing so will give the company the opportunity to charge you a higher monthly fee.

Fraudulent consolidation companies have the habit of requesting for information on your social security number, credit card numbers and the like even before a quote is provided. You only need to initially provide the amounts of your debts, the identity of your creditors and the interest rates were charged to consumer debt consolidation firms.

Utilizing a consumer debt consolidation company will give you the opportunity to start anew in your financial situation. By following those advices, you will be able to determine legitimate consolidation companies from fraudulent companies, and be able to make a final selection on a single company to obtain assistance from.


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