Debt Consolidation Scams

There is little doubt that you have come across commercials or advertising from companies touting that they can guarantee that they can get your credit card payments and your interest rates lowered. While some companies can deliver on the promise, there are many who can not, and have no intention of doing so. In fact, they are looking to steal your hard earned money and then disappear.

The unrealistic idea that someone will be able to save one from their credit problems puts many people at risk for scams and unscrupulous individuals or companies. These types of scams are becoming more and more common as the number of consumers that are struggling to get by and pay their debt, increases.

If you fall for one of these schemes, you could lose hundreds or thousands of dollars, in a best case scenario. In a worst case scenario you could have your identity stolen and will have to spend hundreds of hours trying to convince creditors and possibly the police that you haven't broken any laws. Either way, you'll find that your financial world has taken a turn for a worse. You will have to eventually start paying your creditors again plus any late fees that have accumulated while you were waiting on the fake organization to do what they said they were going to do.

To avoid being taken advantage of and scammed there are some things that you should watch out for. While they may not be able to assure you 100% that you won't be taken for a ride, they can help you significantly lower the chances. Never do business with an individual who contacts you and promises to help you get rid of your debt. If you haven't asked for help, don't accept it. They are likely trying to scam you. These people are generally calling as many people as they can until they find someone that falls for their little scheme. Often times, these individuals will ask for money up front. This should be a big red flag. There are many debt consolidation companies, especially non-profit ones, that will provide services for you either free or charge or for a nominal fee such as $20-$30 per month. You also can secure a debt consolidation loan free of charge.

Other companies to look out for are companies that claim to be debt negotiation or settlement companies. These companies promise to settle the debt that you have with your creditors for 40%-60% of the original amount. However, whether or not a creditor will accepts a settlement offer depends on the creditor, not the debt settlement company. They can't make your creditors do so.  What they also don't tell you is that you will be paying them hundreds or thousands of dollars for many months before they will even contact your creditors and offer a settlement amount. So not only are you being hounded with phone calls from your creditors asking for their money because they haven't been paid in months, but you also have to trust that the debt settlement company  won't just take off with your money. Often times it takes many months or even years before you have saved enough money to even approach a creditor and ask them to settle for 40% of the original payment. If the company suddenly disappears, not only have you thrown away thousands of dollars, but your credit is ruined, because you haven't paid any of your creditors.

Before you agree to work with any company, be sure to check them out with the Better Business Bureau and the with your state's Attorney General's office. They will be able to tell you if any complaints have been filed with the company. If they have, or if they have no record of the company, find someone else to work with. You should only work with companies that have a good record and have been in business for many years.