Be Aware of Debt Management Scams

By Max Webber
In June 8, 2010

Read on to get debt free now!  Such statements are common ways for debt consolidation companies to get your attention.  It is important to understand how debt reduction services work before you make an agreement with any of them.  Read the following blog post to get better familiarized with how you can identify the difference between genuine debt management companies and scammers.

Those in trouble are easy prey; people looking for debt consolidation companies are in a vulnerable position.  They may be in immediate trouble, searching for a way out of financial ruin, so they are more likely to be trusting of businesses that offer immediate solutions.  Some debt reduction services are not too far removed from the credit cards sharks who get consumers in poor financial situations in the first place.  The first thing to remember is to stay vigilant and selective; remember that solutions exist, but you must find the best one for you.

Secondly, it is beneficial to evaluate several companies offering a debt management program.  Consider the following tips when approaching debt reduction services for the first time:

–          Don’t let them pressure you into engaging in a plan or make guarantees without researching your specific situation.

–          Research the company and their offered services.

–          Review all literature relating to the agreement.  Search for hidden or unwanted fees.

–          As the program begins, be sure that your creditors are getting paid on time and the logistics of the agreement are maintained as planned.

–         Check to see if potential debt management providers are listed with the BBB.  A company you are considering working with should have an “A+” rating.

In addition, some companies may not have poor intentions, yet do not completely offer their services without a catch.  The following are particular ways some debt consolidation companies may incur funds from their clients:

–          Charge a portion of the total debt

–          Charge a portion of the amount saved using their services

–          Charge sign-up fees

–          Charge monthly fees for being enrolled in debt reduction services

The good news is that there are existing debt solutions out there, but it is highly important to be selective in working with a potential debt consolidation companies.

Click "More" for important American Credit Foundation client transition information