Avoid debt consolidation scams

Many people in the recent years have fallen into debt due to various reasons such as poor job market, rising prices and terrible economy.  Consequently, the number of debt relief agencies has also increased in response to the higher demand for debt management.  Unfortunately this has also provided a great window for many unscrupulous companies to scam desperate individuals.   The purpose of this document is to provide you with the necessary information so that you won’t become victimized by these agencies.

How to Spot a Scam
There are various ways that you can easily spot those companies that are trying to scam you by offering fake debt help.  You must always know that if an offer seems too good to be true, it usually is.  You also must know that there is no way for your debt to disappear unless you pay it off.  There may be ways that you can negotiate a lower interest rate or a repayment plan with your creditors, but your debt cannot be removed all together unless it is paid off.  Any company or individual that advertise to the contrary and promise to remove your debt is simply looking to scam you.  The following statements are a sign of scam:

  • We can Remove all your Debt – Be aware of those who make such claims, as stated earlier, the only way you can wipe off your debt is by paying it off.  There is no other way of removing your debt.
  • Offering Loans without Reviewing Your financials – Although many legitimate companies offer debt consolidation loans, you should be aware of those that ask you to take out a loan without looking at your financial situation.  These companies are looking to charge you a fee and give you another loan on top of your existing debt.
  • Requires Monthly Fees – It is ridiculous for you to be paying a monthly service fee when you are already burden with your debt payment.  There are various companies that offer free debt analysis and consulting.
  • Ask You to Not Contact Lenders or Stop Payment – The fact is many lenders will be willing to work out a payment plan, reduce your interest rate or even extend your loan.  The fact that you are asked not to contact lenders, it may mean that the company you hired is withholding or hiding information they do not want you to know.
  • Sign Blank form or Assign Your Property – This should be obvious; however, many folks fail to see it due to the fact that they are so desperate for help.  However, don’t ever sign any blank form or contract without fully reading it and understanding its terms.  Never sign over your property to another party or company, ever.
  • Not Fully Answering Your Question – If you find that when asking questions the company is too stringent, avoids answering questions or simply trying to be vague, it is a good indication that the company is not legitimate and is trying to scam you.  Be sure to check the company’s reputation online and by calling or visiting the Better Business Bureau website at www.bbb.org

Other Unusual Practices to Watch Out For
Remember legitimate companies do not force you to make a decision on the spot or use scare tactics.  It is a scam to play into the fear of innocent individuals or stir emotions to cause you to give into their request.  You should never make a decision on the spot when contacted by a debt management company.  You have the right to think over and do your research before making a decision.  If a company asking you to accept their offer on the span, you can be sure it is a scam.