How To Avoid Debt Consolidation Scams
At the times of recession and in poor economic conditions, lots of people go for debt consolidation or debt settlement to pay off their bills easily. There are many debt consolidation companies who have helped countless people get rid of their loans.
If you are paying a very high interest rate on your credit cards or personal loans and are finding it hard to pay the monthly bills, such companies can combine all your bills into one monthly payment with a reasonably lower interest rate. By doing this, you can pay off your bills faster, although you are paying less to the creditors every month. However, keep in mind that debt consolidation does have a slightly negative impact on your credit history.
Banks trap innocent consumers through credit cards. Everything will remain fine if you are paying your bills on time; however, the interest rate will shoot up dramatically if you miss just one monthly payment. After that you will continue to pay the creditors every month but your principle amount will remain the same as almost all the money goes towards interest.
Before you close your credit cards and go for debt consolidation, you need to make sure that the company is credible. Your financial matters are involved; hence, you need to be extra careful.
Instructions
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1
Verify the legitimacy of the company
You might be getting telemarketing calls for debt consolidation. There is no harm in getting information through such calls but before you make any final decision, you must ensure the company is legitimate. You can call the Better Business Bureau and see if the organization is registered.
Every debt consolidation company has a proper law office. You may go to your attorney and ask him to check the credibility of that particular law office.
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2
Consult before you enroll in the program
Before you sign up for the program, you must take views of the people who have worked with that organization in past. It will be an ideal scenario if you can find someone who has consolidated his loans through that company.
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Information
Do not make a hasty decision and ask as many questions as you want to. Most of the times, the first monthly payment that you will pay to the debt consolidation company will be their program fee and will not go towards the creditors. Therefore, it is imperative that you have complete information about the program, in order to avoid late payments.
