Beware Of Debt Consolidation Companies
Educating yourself on the debt consolidation process is one of the best ways to keep from being scammed by dishonest debt consolidation companies. There are warning signs that can help keep you from falling prey to one of these companies.
Quote Unusually Low Monthly Payments: A debt consolidation company works with the creditors with the intention of lowering your rate of interests. The creditors would have already predetermined how much could be reduced from the rate of interest. It means that all consolidation programs would get you the same rate of interest. But from 2004 the creditors have declined to accept the reduced minimum monthly payments. Companies who promise you less monthly payments may give you low figure. But eventually they will increase the amount once you are pulled in to the program. Therefore instead of comparing the monthly payments, you are advised to request the company for fees on their service.
Insist On All Debts Being Included - When companies insist that all of your debt's be included in a program, it isn't because they are about your financial situation. Some debts, credit union loans for example, are ineligible for lower monthly rates, while other debts, such as student loans, may already be at a low interest rate. The truth is these companies stand to gain more in fees for handling more accounts, and try to do so by insisting you include all of your debts in their program. Consider your debts first, and chose which of these debts you feel have a better chance of being eliminated before you enter a program.
Charge High Upfront Fees: The prevalent scam is to charge high upfront fees, that is, up to thousands of dollars in the name services. There are companies who promise to pay back fees on completion of the program. But very few really complete the program. Their sole motive is to grab money from the weak. Let us not fall prey on them.
Flat monthly rates are charged by non profit debt consolidation companies, as these companies are often subsidized by financing companies. Companies taking a profit from debt consolidation services will usually charge a competitive fee along with their flat monthly charge.
Offering Additional Services - Watch out for companies offering additional services. These services, often scams, can include credit repair, debt settlement, and even debt forgiveness. Know what your goal is, and find out how you can realistically achieve it.
You can settle debt on your own, and credit repair is far from instant. Consider your current situation and assess your debts both individually and as a whole. Find out what your alternatives are. Financially, you may find that filing for bankruptcy is in your best interest. Asking For Account Numbers First - Cautiously guard your personal information such as account number, social security number, or unrelated personal information before quoting a monthly payment. Identity theft can occur if you divulge such information to someone, especially over the phone. All thats needed to receive an accurate quote is your creditors name, interest rates, and balances. - 23218
Quote Unusually Low Monthly Payments: A debt consolidation company works with the creditors with the intention of lowering your rate of interests. The creditors would have already predetermined how much could be reduced from the rate of interest. It means that all consolidation programs would get you the same rate of interest. But from 2004 the creditors have declined to accept the reduced minimum monthly payments. Companies who promise you less monthly payments may give you low figure. But eventually they will increase the amount once you are pulled in to the program. Therefore instead of comparing the monthly payments, you are advised to request the company for fees on their service.
Insist On All Debts Being Included - When companies insist that all of your debt's be included in a program, it isn't because they are about your financial situation. Some debts, credit union loans for example, are ineligible for lower monthly rates, while other debts, such as student loans, may already be at a low interest rate. The truth is these companies stand to gain more in fees for handling more accounts, and try to do so by insisting you include all of your debts in their program. Consider your debts first, and chose which of these debts you feel have a better chance of being eliminated before you enter a program.
Charge High Upfront Fees: The prevalent scam is to charge high upfront fees, that is, up to thousands of dollars in the name services. There are companies who promise to pay back fees on completion of the program. But very few really complete the program. Their sole motive is to grab money from the weak. Let us not fall prey on them.
Flat monthly rates are charged by non profit debt consolidation companies, as these companies are often subsidized by financing companies. Companies taking a profit from debt consolidation services will usually charge a competitive fee along with their flat monthly charge.
Offering Additional Services - Watch out for companies offering additional services. These services, often scams, can include credit repair, debt settlement, and even debt forgiveness. Know what your goal is, and find out how you can realistically achieve it.
You can settle debt on your own, and credit repair is far from instant. Consider your current situation and assess your debts both individually and as a whole. Find out what your alternatives are. Financially, you may find that filing for bankruptcy is in your best interest. Asking For Account Numbers First - Cautiously guard your personal information such as account number, social security number, or unrelated personal information before quoting a monthly payment. Identity theft can occur if you divulge such information to someone, especially over the phone. All thats needed to receive an accurate quote is your creditors name, interest rates, and balances. - 23218
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for bad debt consolidation advice and guidance.
posted by X - Men @ 11:40 AM
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