How to identify a debt consolidation scam

Many people who are terrified because of their overwhelming want to get rid of the endless collection calls from different credit card companies or collection agencies. They are ready to pay a certain amount to some company who will help them to get rid of these calls and deal with their creditors.

You may be stressed off with too many credit card debts and are looking for a solution to resolve your debt problems; there are many debt consolidation companies who will offer their help by dealing with your creditors and combining all your debts under one easy repayment plan. Be careful when you are choosing a debt consolidation company when you are already frightened because of high balances in credit card debt. You don’t want to get ripped off by some debt consolidation company who claims that they will help you come out of this horrifying situation and put you more into debts.

There are many credit consolidation scams that are waiting to catch an unwary customer and make them their target. Sometimes when people are stressed and are looking for a debt solution overlook the terms and conditions set by these cons and as a result, you end up falling into more debts. They will charge you upfront fees and other hidden fees which were not mentioned in the contract when you signed up with them. They will try every possible ways to retain their services by guaranteeing you 110% that your debt problems will be resolved. It is actually never going to happen.

Beware of such companies. Calm yourself down and check the company thoroughly on the internet. You will come to know about any negative feedbacks from other customers who are dealing or have already dealt with them.  Here are some sign of “Debt Consolidation” scams which you should be aware of:

Quote unusually low monthly payments: A legitimate debt consolidation company will have a certain minimum amount to qualify in their program. They cannot go lower than the minimum amount which your creditor will never accept. By offering you an amount that is easy for you to pay, they are actually trying to make some money from you and they are not going to send it to your creditor. Once you have enrolled in their program and been with them for a few months, they will raise the monthly payment all of a sudden. By this time, you might have already paid a lot to them which never went to your creditors and they will still try to make more from you.

Charge high upfront fees: This is the most common scam where illegal companies charge a very high fee in the beginning and promise that a portion will be refunded back after the program is completed. Only a smaller percentage of people are actually able to complete the program. The best way to search for a company is to check with the legal authorities in your area. From there, you will come to know about any previous complaints against these companies and specific reasons. A legitimate company will charge a flat monthly fee for each/all the accounts included in their program and a few may or may not charge a certain percentage on the amount of debts.

Request for your account number before hand: a reputed debt consolidation company will be able to offer you the free quote by knowing the names of your creditors, balances and the interest rates on those accounts. They should not ask for your account numbers, social security number until you have decided to sign up for their program. If you fall into the hands of a scam company and give your personal information, you open yourself up to an identity theft.

When you are looking for consolidation of credit card accounts, a reputed debt consolidation company will work out a realistic plan and will address all your concerns and worries. He will make sure that you have understood the process before you sign up for their program.