 |
Consolidating Debt? 5 Warning Signs Of A Shady Debt Consolidation Or Debt Management Company |
|
|
Submitted by Cheryl Adams
| RSS Feed
| Add Comment
| Bookmark Me!
Unfortunately, not all debt consolidation companies are legitimate. To avoid the shady companies, educate yourself on the debt consolidation process and watch out for these warning signs.
Quote Unusually Low Monthly Payments
A debt consolidation company works with creditors to lower your interest rates. Creditors have predetermined rates that they will lower to, so every debt consolidation program will get you the same rates. But since 2004, creditors no longer accept reduced minimum monthly payments.
Companies who quote unusually low monthly payments are probably giving you a low figure, which they will raise once you are in the program. Instead of comparing monthly payments, request information on their fees.
Demand All Debts Be Included
Companies who demand that all your debts be included in the debt consolidation don’t have your best interests in mind. Some loans, such as credit union loans, are ineligible for lower interest rates. And other types of credit, like student loans, may already have a low interest rate.
However, by including all your bills in the monthly payment, the company can charge you a higher fee for handling more accounts. Before you enter a program, decide which accounts you want to consolidate for lower rates.
Charge High Upfront Fees
The most common scam is to charge high upfront fees, up to thousands of dollars, for services. Sometimes companies will promise to refund fees on completion of the program, but few clients actually complete the program.
Legitimate non-profit companies charge a flat monthly fee for each account handled. They are usually subsidized by financing companies. For profit companies will charge a competitive fee along with a flat monthly charge.
Offer Debt Settlement And Other Services
Be suspicious of those offering other services besides debt consolidation. Debt settlement, credit repair, and other programs are often just scams to take your money.
If you do need to make a debt settlement, you can save yourself money by doing this yourself. You may also find that declaring bankruptcy would be a better financial choice.
Request Account Numbers First
Be highly suspicious of any company that requests your account numbers, social security number, or other personal information before providing a quote. By providing this information, you open yourself up to identify theft.
To receive an accurate quote, simply provide creditors’ names, balances, and interest rates.
|
|
|
|
|
LinkedIn Recommendation:
 Carl Madden - Search Engine Marketing Consultant at Osato Tree - There are many times I have been stuck on something, but now I that I am working with Teo Graca, I know I can get unstuck quickly. He has a way of getting at the meat of the solution to any problem when it comes to business planning. I really don't know anyone with such a well rounded skill set. I think that is what makes it possible for him to do what he does. I highly recommend Teo and Net-Teams! - March 15, 2012, Carl was Teo's client |
|
Featured [Debt Consolidation] Articles:
|
|
