Debt Consolidation Scams
Many who are trapped in debts and lead stressful lives see debt Consolidation as a savior. Many companies have mushroomed over the years offering help to financially troubled souls but it is pathetic that sizeable number of such companies turns out to be scams, playing not only with the trust but also with finances of already distressed people. Their actions or inaction push people deeper into troubled waters, to a stage from where recovery is nothing short of a fantasy. It is hence important to understand these scams to protect us, before it is too late and hope of recovery from financial mess, diminishes altogether. Trustworthy and honest debt consolidators do exist but presence of some unscrupulous debt consolidation companies has created atmosphere of doubt and mistrust.
Credit Repair Scam
One of the scams is "Credit Repair" scam, in which companies promise to erase negative records from credit bureaus in a legitimate manner, thereby making it easier for you to get loans again. Such companies start by providing you analysis services for an upfront fee payable by "phone checks" or "demand drafts" using your bank account information. Irrespective of your decision, you later find a debit on your checking account. Lesson to be learnt here is not to send your credit card number or bank account number to any company before knowing its whereabouts and modus operandi. As if this wasn't enough, next on the list is education material worth $300 to $1,500 despite irrelevance of such material to your current situation and purpose of approaching a repair company. To convince further, they persuade you to get their details and company status verified from NBRB, which is presented as an independent third party reporting organization. Fact is that NBRB (National Business Reporting Bureau) is not a consumer protection agency bound to provide information for consumer welfare; rather it is a commercial enterprise, which upon receipt of a fee from company provides good references to consumers. Truth is that accurate and timely reports cannot be erased by anyone. Federal laws permit credit bureaus to report your true credit histories for seven years, even if negative and in case of bankruptcy, this may go up to ten years. You can on your part, file a dispute with credit bureaus over false record, but cannot get true records erased. Such scams are appalling as they hit consumers badly by exploiting false hopes of improvement. It is necessary to add here that FTC (Federal Trade Commission) does not recognize any credit repair company as legitimate. Credit Repair Organizations Act does not permit companies to get paid before providing their promised services in full, so their upfront charges for any activity or related service are meaningless.
Christian Debt Consolidation Scam
Another common scam is "Christian Debt Consolidation" scam. You must be wondering how come it be a scam, its Christian after all. Not really! They are not a religious society. They use word Christian to gain your confidence and then your money. Such scams are really bad for they play with faith and religious sentiments of people and give them false hopes, which are never realized. Any debt consolidation company shouldn't need the support of religious or biblical proverbs and if they use such, you know what to do, avoid them!
Just in case you thought, it’s all over, here is yet another scam where a debt consolidation company is presented as a non-profit entity. Word "non-profit" seems to reinstate confidence and expectations that since company is a non-profit one; it shall surely work to bring you out of the financial mess without profiting from this. This is far from truth in many cases. Non-profit debt consolidators do exist but again not all that advertise themselves are non-profit. At times client's monthly payment that should have gone to creditors is found diverted to these non-profit consolidators as Donations, which results in your paying late fee and loosing hard-earned money or even a bad patch on credit bureau records.
Government Grants Scam
Another scam to mention is "Government Grants" scam, where consolidators promise clients, trillions of dollars from government grants or aids. You are required to purchase their books for information and enroll into their program. Grants are usually given by organizations interested in achieving specific goals which interest community or country and not a single person or family. No one will give you grant to pay your credit card bills. But you end up paying for program fee and information material when your priority is to pay up for loans or make alternate arrangements to recover from financial mess.
Predatory Lending Scam
"Predatory Lending" is yet another method to take advantage of your deteriorating financial status. Some companies knowingly wait until a client slides into a phase where repayment is getting more and more difficult. It is then that these companies refinance at much higher fees and poor debtor has to pay that or loose their house or any other asset they secured the loan with
Above-mentioned scams should provide you a fair bit of idea as to how such unscrupulous companies play, not only with faith and trust, but also with deteriorating financial positions of people. Knowledge is the best protection you can have and it always helps to do some research before getting involved with debt consolidation companies.
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