Itdebts

Consolidating Debt? 5 Warning Signs Of A Shady Debt Consolidation Or Debt Management Company

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 dont 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.

Those companies need more customers, and as I already explained in a previous article, they have very nice sales pitches, like:

We will help you to eliminate your debts, don’t worry, Consolidate your bills into one monthly payment without borrowing, until Keep your property…

The Christian Debt Consolidation Services seems legitimate at the first glance, but someone who has an eagle eye on the sale process will see in that the name of Christian here is taken to get people in a state of confidence.

What does it mean? It mean that by reading this word, something is happening in the customer mind, and ultimately, he will become a customer…

Actually, it is just another pitch, just more appealing to catch even more people, taking them from two sides:

1- You don’t have choice,

2- You think they are better than others, that they are legitimate.

People really think that these Christian Debt Consolidation companies will help them.

Did we forget what does help mean?

I don’t know for you, but if I want to help somebody who needs $10,000, I don’t ask him to give me back $12,000 while I know that him and his family are already in troubles. This is pure injustice.

I will give him those $10,000 and when he can give them back to me, I will tell him: thanks for my $10,000. But what if he can’t give me my money back?

IF he can’t, he can’t. When you lend money to someone in difficulties, you pertinently know that you may never see this money again. This is what we call help, and in reality, it is only justice.

I have already done that, and I will continue to do it, without asking any kind of interest.

So, before you decide to go to any of these companies, or others, like debt settlement or debt counseling companies, be sure that you know what you are doing, and more important, be sure that the company is legitimate.

A name is only a name, what is important is people actions…

I don’t recommend to go to these companies, but what I recommend is a good money management plan instead. There is a lot of way to earn more money from your home today, with Internet. What people in debt want is not to getting out of debt! What they want is more money.