Debt Consolidation Scams

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The attractive taglines can easily coax a distressed debtor to enroll with a debt relief program. Their offer might seem to be lucrative when he is going through financial doldrums. Therefore this is a very common ploy used by fraudulent debt relief providers.

The scam debt relief companies have canopied swiftly over the US market with the huge leap in the number of debtors looking for professional help. Scams have almost contaminated every debt relief service you can name of. Distinguishing a fraud debt company from a legitimate one would be a difficult job for common consumers.

The following are some of the general debt consolidation scams, practiced by fraudulent debt consolidation companies:

1)Extremely low Interest Rates:

The company might not have revealed the hidden charges if you find that they are quoting extreme low interest rate. They might disclose it at the end of the consolidation program, thereby increasing your consolidation costs. Try to avoid getting lured by low monthly payments, instead estimate that there is a possibility for hidden costs which may incur later.

2)High Upfront fees:

Try to avoid the companies who demand high upfront charges in exchange for their services. Under the Credit Repair Organizations Act, as long as the debt consolidation companies do not effectively complete the promised services till then they not eligible to ask you to pay. You should avoid the service of the companies if they force you to pay more than a fixed rate based on your debt.

3)Looking for unnecessary personal details:
Try to avoid enrolling with companies if they ask for your social security number, your account details and other personal information before providing the cost they would charge. If the companies are too keen to know such redundant personal details then it gives a negative indication. This kind of warning signs only emphasizes the company’s intention for scam.

4)Offering erroneous advices:

Almost all scam debt consolidation companies would offer you wrong advices such as not to contact the credit bureau, not to go for credit counseling and so on. They might propose you to create a new credit identity as your present credit identity have huge amount of debts. If a debt relief company advises such things to you then you can expect to have fallen into the trap of a scam company.

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