Debt Relief Services That Scam You

By: Justin narin

Many debt relief services are there to help, but there are some that really just want to take advantage of your vulnerable situation. Understanding the difference between a real debt relief service and one that wants to scam you can save you money. The following are four scams to watch out for when seeking relief for your debt.

Debt Relief Services - Credit Counseling Scams

First, it is important to know that there are legitimate credit counselors that can truly help you reduce your debt. But it is equally important to understand that not all credit counselors have your best interests at heart. Knowing the signs of a scam will protect you from ending up in even more debt.

What Credit Counselors Do

Credit counselors take a look at your financial situation and help you find ways to manage it. This may include creating a reasonable budget, prioritizing your bills, and developing money management skills.

What Credit Counselors Don’t Do

Now that you know how credit counselors help you reduce your debt, it’s important to know what they should not be asking you to do.

Any credit counselor that asks you for high fees for signing up with them, typically anything that exceeds $50, is probably more interested in your money than actually helping you. Monthly fees that are over $30 should also send up a red flag.

A credit counselor who asks for your vital financial information, such as your account numbers, before explaining what debt relief the company can provide, is probably not entirely legitimate. A counselor should be willing to explain how he or she works before asking for your important information.

Debt Negotiation Firms

Wouldn’t it be great to find a company that can approach all of your lenders and negotiate lower payoff amounts for you? Owing less money means paying off your loans faster. But the truth is that companies that claim to do this don’t really have that power. Not only do they charge you a high fee for this service, but they may also ask you to stop making your monthly payments. In the end, you’ll end up with late fees, higher interest rates, and more debt. And that lower payoff amount will never materialize.

Debt Management Plans

These plans are sometimes an option offered by credit counselors or other debt relief firms. They require you to give a certain amount of money to the company each month, and that money is then used by the firm to pay off your various bills. These firms may or may not be able to negotiate lower rates for you on some of your loans. While some of these are legitimate, you have to be very careful.

Whenever you trust someone else to pay your bills for you, you want to make sure they are doing what they say they are, rather than taking your money and creating more debt for you.

When Debt Consolidation Loans Are Scams

Like credit counseling, a debt consolidation loan is a real solution to reducing your monthly payments. You consolidate all of your high interest bills into one loan at a lower interest rate, lowering your monthly payment. However, there are some scams to be aware of. Some will charge you high fees to sign up for the loan or hidden fees that make the actual total larger than you realized. Others may use your home as collateral without making you aware of it. Make sure you understand the true terms of any debt consolidation loan before you sign the papers.

Debt can be both overwhelming and scary, but don’t let other people prey on your fears. When you understand what your true options are and whom you can trust, you are one step closer to reducing your debt.

Be Wise When Locating A Debt Consolidation Service

By: Frank Froggatt

If you decide to consolidate your debts you can head off a lot of coming stress and grief that is linked with being confined under a heavy financial burden. Solutions from debt consolidation help to relieve the incredible weight that debt can cause on individuals and households. Holding this weight can genuinely bear on every area of your life, and sometimes contribute to tragedy.

Numerous debt consolidation establishments and companies tell you that if you pay back the least sum of money, applying it to your accounts will take you forever to repay your debts. This is true; however, if you are yielding the minimum sum, it is demonstrating effort on your part.

After attending classes, analyzing law, and examining credit repair solutions, I found that asking for help from a debt consolidation company in comparison to redeeming your debts on your own counts against you. In other words, if you have to use an outside source to pay back your debts, then it demonstrates that you are not dependable for your own money management.

Companies that extend debt respite services make claims to offer a genuinely simple method to shrink your payments by rolling them into one easy to make monthly payment. You have to be careful though because some of these companies will charge hidden fees along with lofty rates of interest. With this being the case, you aren't actually getting out of debt any faster than you would have if you simply paid back your bills on your own. These services are incredibly effective at inducing people who are in debt to apply for these loans or for solutions that assist them to get out of debt, and then take advantage of them.

There are some parties out there that will propose fast sounding deals to pull clients in. Sometimes they make false statements that lead consumers to trust that they can get help at once. The truth of the matter is, when you immerse yourself in debt its going to take a piece to dig yourself out. Sometimes it's a truly hard truth to face, but when you act irresponsibly you can end up paying for it for a long time. With this in mind, don't settle for any of those fast talking salesman, and believe me they are very good, take the time to do the research and obtain a company that is actually there to help. When you acquire a great company they won't charge you your firstborn child; instead they will help you to get rid of your debts over an extended period of time.