DS Articles

In this difficult economic environment, the debt consolidation industry is growing rapidly. Everyday more people are being laid off, this is the worst economy since the Great Depression in the 1930s. Many people have found themselves in the position of not being able to meet their monthly expenses, and have debt collectors hounding them. Often, debt consolidation services can be the solution you are seeking. But make sure to research the companies you are considering doing business with. Unfortunately, as the number of people seeking help has grown, so have the number of people looking to make money out of the situation.

If you find yourself in the position of having too much debt and debt consolidation sounds like it might be right for you, there are several steps you need to take to avoid being caught in a debt scam.

As you are investigating your options, you will be looking for quotes. The very first thing you need to do is keep your private information private. If you are getting a quote from a debt consolidator, the only information you need to provide them with is the list of your creditors, the balances you have with them, and the interest rates you are being charged. You do not have to provide them with your social security number, account numbers, or other private information at this time. By giving them this information you are opening yourself to the nightmare of identity theft. Once youve signed on the dotted line, you will need to provide this information, but for the purposes of the quote, it is not necessary. As for the quote itself, you should not be asked to pay for the quote. If the company is looking to charge you at this point, move along.

Debt consolidation programs tend to get similar deals from creditors. If you are offered a lower monthly payment from one company over another, you are most likely being charged a higher interest rate. This will wind up costing more over the long term. You should also look to see what fees you are being charged. Is there a fee built into your monthly payment? Is there an upfront fee? Are there hidden fees which will be incurred long after youve signed the contract? Make yourself aware of the terms of the contract, including any cancellation fees. Look to see how fees are refunded to you in the event you wish to cancel your contract. You also want to be aware of the settlement guarantee, it should be specified, in writing, what percentage of the settlement is guaranteed.

Many debt consolidation companies pay their employees commissions, or offer incentives for new accounts signed. Dont let yourself be pushed into signing up with a debt consolidator upon your first contact with them. It is very important to calmly evaluate your options, something that is difficult to do when you are being offered the hard sell. No matter how pressing your credit situation, take your time and make sure to make the right decision.

Finally, you need to make sure the companies you are considering are reputable. Check with the Better Business Bureau to find out how many complaints have been filed. Contact the Federal Trade Commission and your states Attorney Generals Office for additional information about the company. If you find a company you are considering to have complaints mounting into the high double digits, cross them off your list. And dont forget to use your favorite search engine to help you get more information. If you do a search on the company name youll get a good idea of what people are thinking. If theyre unhappy, youll find many complaints.

Dont forget, the debt consolidators are in the business to make money for themselves. If you dont take the time to evaluate what you are being offered, you may wind up in worse financial shape than you started. Make sure you understand what you are signing up for. And if you have difficulty understanding the contracts, dont be afraid to get help. Search out a financial expert who is not associated with the debt consolidation industry.