Friday, August 31, 2012

How to know whether a debt consolidation company is a scam

Everyone wants to become debt free and many people assume debt consolidation as a legitimate means to pay off their debts and breathe a sigh of relief. As a result, they look for debt consolidation companies that will solve their debt problems for good.

However, they are not aware there are scam debt consolidation companies in the garb of legitimate debt consolidation companies that target gullible customers to make some quick money. They will make some promises that are too good to be true and this is one of the surefire signs that they are a scam. You should always stay away from these scam bill consolidation companies all the time since trying to get debt free with the help of any of these companies can land you in bigger trouble. Given below are the signs that will help you identify con debt consolidation service providers:

1) Not informing you about your rights as a debtor

A scam debt consolidator will never let you know about the rights you enjoy as a debtor. They will also not say what steps you can take for yourself to make yourself debt free.

2) Ask you for upfront payments

Scam companies will ask for payments from you even before they provide any service to you. They will also make false promises to repair your credit to get you into their trap.

3) Tell you not to contact any credit bureau directly

A scam company will advise you that you don’t need to contact any credit bureau at any point of time.

4) Tell you to prepare a new credit report

It is a surefire sign of scam companies that they will tell you to prepare a fresh credit report with an Employer Identification Number.

5) Ask for your Social Security Number

A genuine company will never ask for your Social Security Number by any means.

6) Tell you to challenge all your information in the credit report

A scam company will give you advices to challenge and deny all your information that is present in your credit report. They will also tell you to generate a fresh credit identity.

7) Try to sell you loan products

Scam companies will try to lure you into a second mortgage or home equity line of credit. Though you can consolidate your bills with their help, you have to furnish your home as collateral and have the risk of losing it.

8) Offer remarkably low interest rates

It is a sign that there are some hidden charges involved which the lenders won’t disclose.

9) Asking for personal financial details

A genuine consolidation company will never ask for details like your bank account number, Social Security Number, driving license number and other details prior to signing an agreement. You might be exposed to identity theft.

Knowing these signs will always help you avert a scam bill consolidation company.

Jonny is a financial advisor with He helps people to resolve their credit card problems and also problems related to home equity loan, personal loans, and other loans.

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