Opt Out of Debt Consolidation Scams
Debt consolidation scams work very similar to other forms of fraud: people look for ignorance, and then exploit it to their profit. What, then, can you do about it?
Your first stop should not be to a credit counselor, but to a financial advisor. Most banks have someone that you can talk to (most of the time for free). If you bank won't help you, find another one. Take your bills and your analysis of your situation. A professional at your bank knows all about credit, bills, different accounts and the best way to get solvent. After all, money is their life. So ask. Even a simple plan can help. If your situation is more complicated than they can help you with, they will have a list of names of people that you can talk to. Your bank is your greatest financial resource.
Now that you've talked to someone more knowledgeable than you are, you know about what type of debt consolidation that you need. Finding a company can seem daunting, but don't panic.
First, whatever you do, don't do business with someone that contacts you first about debt consolidation. You should go to them, not the other way around.
Next, are you getting a debt consolidation loan or a debt consolidation negotiation (it goes by different names)? If you are getting a debt consolidation loan, approach it the same way that you would any other loan. Careful research. Compare interest rates and terms. Beware of loan sharks. You know the drill.
Debt consolidation negotiation is where most of the fraud lurks. Since so few people actually understand the process and it changes constantly, the confusion is a prime target for the unscrupulous. Debt consolidation negotiation is a much slower process than a debt consolidation loan, but is the only alternative to bankruptcy for some people.
If you can get a debt consolidation loan instead, do it. Why? It looks better on your credit report AND IT IS CHEAPER PER MONTH! Yep. With debt consolidation negotiation, you still have umpteen bills that each has a minimum balance, even if you are only writing one check. With a debt consolidation loan, there actually is only one loan. The other debts are gone (okay, repackaged). So there actually is only one payment.
If there is absolutely no way that you can get a debt consolidation loan, go to a credit counselor approved by the Federal Trade Commission. This doesn't guarantee that they are great, just that they are less likely to do something illegal. Also, the creditors, not the debt consolidation companies, set the minimum payments for each of your debts. So the only difference in your payments is how much you will pay the debt consolidation company to help you. This isn't the greatest solution, but it is better than bankruptcy.
Of course, the standard rules always apply. Don't give out your Social Security Number over the phone. Don't give out account numbers until after you get a quote and sign a contract. Don't sign anything until you've thought about it for 24 hours... You know the drill. Be paranoid.
Be sure to visit Debt Consolidation for more information and helpful resources
Your first stop should not be to a credit counselor, but to a financial advisor. Most banks have someone that you can talk to (most of the time for free). If you bank won't help you, find another one. Take your bills and your analysis of your situation. A professional at your bank knows all about credit, bills, different accounts and the best way to get solvent. After all, money is their life. So ask. Even a simple plan can help. If your situation is more complicated than they can help you with, they will have a list of names of people that you can talk to. Your bank is your greatest financial resource.
Now that you've talked to someone more knowledgeable than you are, you know about what type of debt consolidation that you need. Finding a company can seem daunting, but don't panic.
First, whatever you do, don't do business with someone that contacts you first about debt consolidation. You should go to them, not the other way around.
Next, are you getting a debt consolidation loan or a debt consolidation negotiation (it goes by different names)? If you are getting a debt consolidation loan, approach it the same way that you would any other loan. Careful research. Compare interest rates and terms. Beware of loan sharks. You know the drill.
Debt consolidation negotiation is where most of the fraud lurks. Since so few people actually understand the process and it changes constantly, the confusion is a prime target for the unscrupulous. Debt consolidation negotiation is a much slower process than a debt consolidation loan, but is the only alternative to bankruptcy for some people.
If you can get a debt consolidation loan instead, do it. Why? It looks better on your credit report AND IT IS CHEAPER PER MONTH! Yep. With debt consolidation negotiation, you still have umpteen bills that each has a minimum balance, even if you are only writing one check. With a debt consolidation loan, there actually is only one loan. The other debts are gone (okay, repackaged). So there actually is only one payment.
If there is absolutely no way that you can get a debt consolidation loan, go to a credit counselor approved by the Federal Trade Commission. This doesn't guarantee that they are great, just that they are less likely to do something illegal. Also, the creditors, not the debt consolidation companies, set the minimum payments for each of your debts. So the only difference in your payments is how much you will pay the debt consolidation company to help you. This isn't the greatest solution, but it is better than bankruptcy.
Of course, the standard rules always apply. Don't give out your Social Security Number over the phone. Don't give out account numbers until after you get a quote and sign a contract. Don't sign anything until you've thought about it for 24 hours... You know the drill. Be paranoid.
Be sure to visit Debt Consolidation for more information and helpful resources
posted by mileslancaster at 3:23 PM
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