Debt Consolidation Scams
Beware of quick fixes! Once you get overextended, panic soon turns to desperation. And, as always, there are people who will take advantage of your desperation to offer you a "quick fix" -- at a price. Some are outright scams; others are simply bad deals. Here are a few of the debt consolidation scams we know about.
Popular Debt Consolidation Scams Found Online
Credit Repair Services
These organizations promise to clean up your credit report for a fee,
usually a few hundred dollars. This is a scam because no one can remove
true information from your credit report. If you really did miss several
payments on a credit card, for instance, no one can get that fact taken
off your report. Only time will accomplish that. No comment can stay
on your credit report for more than seven years (except for Chapter
7 bankruptcy, which can remain for ten years).
It's true that most Americans' credit reports have at least one error
on them. However, lenders are aware of this fact and take it into account
when evaluating your suitability for a loan. What they look for, primarily,
is a pattern of payment problems, especially fairly recent ones. So
having a couple of negative remarks on your credit report will generally
not affect your ability to obtain credit.
Furthermore, you can correct errors in your credit report on your own
-- for free. If you are denied credit because of information in your
credit file, you are entitled to request a free copy of your credit
report for up to sixty days after you've been turned down. If you see
something untrue on your report, you may challenge it in writing and
if the reporting bureau cannot substantiate it, they must remove it.
If you haven't been turned down for credit in the last sixty days, you
can still get copies of your credit reports for a small processing fee.
Guaranteed Loans
Any company that claims they'll give you a debt consolidation loan
at a ridiculously low interest rate, regardless of your credit history,
is almost certainly not a legitimate business. You'll be asked to send
a one-time processing fee or application fee, usually at least $200
but sometimes more than $500. Of course, that fee is all they're really
in business for, and you'll never receive the promised loan. By the
time you call them to find out where your loan is, they'll be gone.
While these outfits market heavily in the U. S., they often operate
in some other country, making it virtually impossible to track them
down.
What's truly sad is that many desperate people have borrowed money
from friends or family, or taken a cash advance from their credit card,
to pay the fraudulent fee. Then they're deeper in debt with nothing
to show for it.
Payday Loans
Payday loans can be very tempting for people who are struggling to
make ends meet. You show the lender recent pay stubs, and they advance
you cash. The intent is for this to be a short-term loan, which you
will pay back at your next payday, or over several paydays. The problem
is that the fees charged are often exorbitant. If you borrow $200 and
pay back $50 a week, you may end up paying a total of more than $350.00!
And if your unable to make the payment you be forced to renew your original
loan at $40-$50 for each occurrence. Clearly this is no kind of deal.
Home Equity Loans
If you own a home with significant equity, you may be tempted to take
out a home equity loan to consolidate your unsecured debts. This may
be a bad idea because it converts unsecured debts to a secured debt.
If you fail to make payments on a credit card, usually your creditor
can't take away the stereo you bought with the card. But if you fail
to make payments on a home equity loan, you could lose your house. That's
because a home equity loan is simply what banks used to call a "second
mortgage" under a different name.
Finance Companies
Like banks, finance companies are in the business of lending money.
But their standards are much lower than those of banks. The good news
is that this means you may be able to get a debt consolidation loan
from a finance company. The bad news is that, because they make loans
to so many poor credit risks, you'll pay unbelievable interest rates
-- sometimes up to 40%. And while banks are willing to work with you
to make other arrangements if you can't make the payments you agreed
to, a finance company loan usually includes harsh penalties if you miss
even a single payment. You may be asked to put down your car or some
other valuable possession as collateral, and if you default, you may
lose that possession. You will find yourself constantly harassed by
their collection departments and may have your wages garnished.
more...
We can get you a better deal. We guarantee it.
Our programs and services are designed to get you out of debt in the shortest amount of time. One of our debt consolidation services or even debt settlement programs may be the right fit for you. Talk to a true financial expert today to learn more about what options are available to you.
Sound good?
