Debt Consolidation Scams Can Render You Penniless
Debt consolidation has become quite a popular means of dealing with rising debt and other financial problems. Unfortunately, fraudulent organizations and scheming individuals are now using this as a means of scamming consumers for their money. Here’s what Phuphanwine, a debt consolidation blog, has to say about the prevalence and dangers of dealing with a fraudulent debt consolidation company.
Though there are some online companies which provide financial mediation and other services financial related that charge membership fees or administrative fees upfront, if a debt consolidation company that provides nothing but debt consolidation services asks for money upfront, you are facing a scam. The law prohibits these specific companies to charge money upfront unless they provide other services than debt consolidation and they can only charge money for those services. Any fee for debt negotiation or consolidation can be claimed only after the debt consolidation program has been executed successfully.
Also beware of those companies that ask you for one or two thousand dollars to pay for the costs of closing a consolidation loan deal for you. If there are any closing costs, they can always be included in the overall loan costs and be part of the loan installments. Just follow your instinct, paying to a lender to get approved for a loan makes no sense. If the company claims to be a lender and asks for money upfront, chances are that you are also facing a scam.
Be careful with any transaction you make with a lender, especially if it involves payment for any service or disclosing personal information. Make sure that the services and any fee that will be collected from you are stipulated in the contract. Make sure that the company is legitimate and that the charged fees are acceptable by shopping for different rates online.
Ways to avoid frauds and scams
Before you deal with a debt consolidation company, or any financial institute for that matter, it’s essential to think of your privacy and security first. You can do this by making sure that the company you deal with is reliable, trustworthy, and well-received by other consumers. Here are some tips another blog for finding reliable debt consolidation companies:
Majority of scam companies would represent themselves as nonprofit companies, which is probably a fake claim. Debt consolidation companies are businesses that work to make a profit for their proprietors and stockholders. They can’t survive if they don’t make profits. You shouldn’t depend on a company only since they declare themselves to be nonprofit.
Though on certain occasions it might be difficult, the Internet can help you access various forums where actual customers share their experiences with different consolidation companies. A lot of consumers inform about scams so that no other consumers fall into the same trap. You can check out the companies that you have short listed with these forums as a protection from being conned.
Some government websites also help protect consumers by providing them a list of legitimate debt consolidation companies that operate in their local area. Check out these sites for the updated list and guidelines on debt consolidation.
You should ensure that you receive authenticated quotes from all companies you have taken into account. Most credit card consolidators work in an identical manner and should come to approximately similar interest rates and monthly payments that you need to make to your creditors.
Many scam companies providing credit card consolidation services tell you not to talk to the credit bureaus. You should understand that you have the right to talk to the credit bureaus and these advices are red flags of scam companies.
Give yourself enough time to shop around and compare the rates of different debt consolidation companies so you can get the best deal. Aside from the rates, also consider the terms and other conditions to get a better service.
Never make payments before services are offered
A final warning on steering clear of profiteering and scamming predators is to avoid making any payments before services are offered. Most scams are based on upfront payments that are charged to you and taken as profit instead of using that money to provide you with the service you are paying for. Here are some additional tips:
You should stay away from companies that ask you to pay for their services in advance in the form of upfront fees. As soon as you make the payment, they would vanish like fly-by-night companies. According to law, companies should offer the services first before receiving any payment from you.
Remember that you have your rights as a consumer and you should use these rights and laws that uphold them to avoid scams. Unfortunately, you can’t always put full trust in the law, because even if you catch a scamming criminal, it is highly unlikely that you will get your money back, so be smart and cautious about your decisions and who you deal with.
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