Learn How to Spot and Avoid Debt Consolidation Scams

There are debt consolidation services that can help you to reduce your payments monthly and to get your debts paid as quickly as possible.

There are many scams, however, associated with debt consolidation companies. These companies prey on consumers who are drowning in debt and looking for miracles.

They promise more than they can deliver and can leave you in worse financial shape than before you hired them. Choosing the wrong company can be a disaster for a consumer.

Basic Research

If you have found a company that seems to provide the debt consolidation features you need, you must do basic research before making your choice. Look up the company's address, phone number and the url of the company website.

Do the address, phone number and url use the same location and information that identifies the company? You can use WhoIs online to see how long the domain has been registered and what company name it is registered to.

The employees of the company should have credentials that are earned by passing certification exams. Only by coursework and passing the exams can the company's representative become verified credit counselors.

You can use the company name to research credentials. If they claim credential status, you can use the internet to find the requirements that must be met for that counseling status.

It is often best to choose companies that have a physical address rather than a company that operates only online. This allows you to meet in person with a counselor, see the company headquarters and perhaps even interact with other customers.

Pros and Cons of Consumer Recommendations

Checking the Better Business Bureau for complaints about the company is a good idea. Lack of information in the BBB means little as joining the Better Business Bureau is a voluntary act by companies.

The BBB is not a regulatory agency and has lost much of its influence as online business as become more popular but the BBB does log consumer complaints.

If you enter the company name in a Google search you may find sites where customers have discussed their personal experience. These comments can be enlightening if there are many negatives and no positives listed.

However, you cannot believe everything you read online. It's important to realize that many complaints are generated by consumers who had unrealistic expectations of a company.

At the same time, companies that consolidate credit cards should have both positive and negative comments from consumers. If all of the comments are negative and seem to revolve around customer service or poor performance that may be a sign of a scam.

Choosing Companies and Services

Reputable companies will often provide you with a free initial consultation to asses you financial problems. The company will fully explain any contracts required and provide a timeline for consolidating your credit cards.

The best companies will provide you with a contract that is easy to understand and has no hidden fees in the small print. There will be a customer service department that can be easily reached when you have questions.

Ideally, you will have a counselor assigned to your consolidation and thus have a name to contact when you have a question or need an update.

Summary

Any company that promises to consolidate your debt quickly and cheaply and sounds too good to be true - is probably too good to be true. Paying off debt or consolidating debt takes some time and effort to accomplish.

Avoid the scams and look for reputable companies to consolidate credit cards and help you reduce you debt.

Work with your counselor by providing all requested information and check frequently to make sure the company is providing you with the services you are paying for.

I also recommend you to read our guide on credit repair as its jam packed with useful info.