Is Your Debt Consolidation Company a Rip-Off?

Madeleine Jones
October 24, 2017

get me out of here on enter key, credit repairThere are plenty of credit repair companies that promise the moon but then leave consumers high and dry or awash in new debts. It is crucial for consumers to know the signs of a debt consolidation scam to prevent getting sucked in by promises that won’t materialize.

Scam Warning Signs

A debt consolidation company may entice consumers by offering a low monthly payment plan. These payments often rise once the individual is enrolled in the program. Moreover, these low-payments may not be applied to the principle, but rather to high program fees. Fees are important to pay attention to and it is not uncommon for companies to charge large upfront fees at enrollment with the promise to refund these fees upon completion of the program. In reality, few consumers complete the programs and even fewer ever see their fees refunded.

In some cases, scamming debt consolidators will pressure consumers to include all of their debts in the repayment program. However, this is not usually necessary or in the consumer’s best interests and all it does is raise the rate the consumer must pay for the debt consolidator to handle multiple debts.

Identity theft is something that anyone seeking credit repair services should be particularly wary of. Requests for Social Security numbers, bank accounts, passwords, etc. are red flags that should not be ignored. This information should never be required to obtain a quote.

Consolidating & Credit

Consolidating credit card and other debts into a single loan can have an initial negative impact on an individual’s credit score. However, this is temporary and individuals who consolidate their debts and manage their credit responsibly can see an appreciable gain as they begin making regular payments and keep their credit card balances low. As time moves forward and this long-term strategy gains momentum, scores will recover and individuals will be in a better position than when they started. Remember, when it comes to credit, there are no quick repairs and credit scammers will often entice consumers with promises of quick fixes and overnight gain which just isn’t the case.

Negotiating with Creditors

Many credit providers will work with debtors to resolve their debts and it can be worth the time and effort expended to negotiate lower interest rates, reduced monthly payments, and debt forgiveness. A credit repair attorney in Nevada can assist consumers as they navigate their options and determine the best methods for resolving their debts.