What Are The 5 Signs Of A Shady Debt Consolidation Company?
The bad news is that there not all debt consolidation companies are legitimate. You can avoid shady companies by watching out for warning signs and educating yourself on the debt consolidation process.
Be Sure to Quote Unusually Low Monthly Payments
To lower your interests rates, a debt consolidation company works with creditors. Every debt consolidation company will get you the same rates since creditors have predetermined rates that they will lower to. However, creditors don\’t accept reduced minimum monthly payments anymore.
Companies who quote unusually low monthly payments are probably giving you a low figure, which they will raise once you are in the program. Information on their fees is what you should request rather than compare monthly payments.
Do They Demand That All Debts be Included?
Companies who demand that all your debts be included in the debt consolidation don\’t have your best interests in mind. Ineligible for lower interest rates are some loans such as credit union loans. As for other types of credit like student loans, a low interest rate is what they may already have.
But if you include all your bills in the monthly payment, then a higher fee for handling more accounts is what the company can charge you with. Before you enter a program, decide which accounts you want to consolidate for lower rates.
Charging High Upfront Fees
Charging high upfront fees is the most common scam and it\’s up to thousands of dollars for services. Few clients actually complete the program though companies will sometimes promise to refund fees on completion of the program.
For each account handled, a flat monthly fee is charged by legitimate non-profit companies. They are usually subsidized by financing companies. A competitive fee will be charged by profit companies along with a flat monthly charge.
They Offer Debt Settlement and Other Services
You need to be suspicious if the company offers other services aside from debt consolidation. Other programs such as credit repair and debt settlement are often just scams to take your money.
If you need to make a debt settlement, then do this yourself and you can even save money. You may also discover that a better financial choice would be declaring bankruptcy.
Request Account Numbers First
If a company requests for your account numbers, social security number, or other personal information before providing a quote, then you should be highly suspicious. You open yourself to identity theft if you provide this information.
Simply provide creditors\’ names, interest rates, and balances to receive an accurate note.
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