Did you know that the average American has around $38,000 in debt? If you are part of this statistic and feel like you are drowning in debt and are considering a debt consolidation loan, you are in the right place. There are a few debt consolidation scams that you want to make sure you avoid to not end up worse off.
Keep reading to learn more about the warning signs to look out for.
1. Upfront Fees
If a debt consolidation company asks for fees upfront this is a red flag. If they ask for money before they even know what kind of debts you have this is not a good sign.
You want to find companies like debthunch that will not recommend a debt consolidation company that will scam you out of your money. You can read more about debthunch and see what they are all about.
Watch out for a company that guarantees that they can eliminate all of your debt in a specific amount of time. Also, any guarantees to reduce your debt by a certain amount is another rad flag.
A debt consolidation company can’t really make any guarantees because they do not know what your creditors will settle for. Every creditor has different amounts that they will settle for if they choose to settle. There are other companies that are going to have stricter settlement rules in place and some that might not want to settle or reduce your debt amount at all.
If the company you are considering is being secretive about their company, go somewhere else. There is no reason a company should hide who they are, how long they have been in business, and not tell you about their rates up front.
Anytime a company asks you for your financial information and credit card account numbers before they give you information about their company this is a big red flag to go elsewhere.
4. Enrollment Before Reviewing Your Situation
Do not under any circumstances enroll in a debt relief program with a debt consolidation company without anyone looking at your current financial situation. There is no way they can advise you if they have no idea how much you owe and who you currently owe money to.
The only way for a company to give you a solid plan is by pulling up your credit report and verifying your credit card companies with you. Everyone has a unique debt situation and each case will require a different plan of action when it comes to tackling debt.
This Is How You Avoid Debt Consolidation Scams
Make sure that you watch out for the red flags and warning signs above to not fall for debt consolidation scams. We do not want you to end up in a terrible situation. Because so many companies will tell you to stop paying and this will affect your credit.
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Debt Consolidation Scams