To an individual or family that is feeling the effects of major credit card debt, there is nothing worse than putting your trust into a company that promises the world and delivers much less. What I'm talking about is credit card consolidation companies. Now if you were to do a simple search for debt consolidation companies you are surely going to find numerous companies out there that would gladly offer you their services. Finding the companies is not the problem. The problem is in finding those companies that are out to scam you and take full advantage of you while you may be at one of your lowest moments.
To get an idea of the types of scams that are taking place, you need only visit the FTC (Federal Trade Commission). Briefly, the federal trade commission is a federal agency that deals with countless issues regarding consumer protection. One of the major agendas of the FTC is that of pursuing law enforcement for wrongs against the consumer.
On the FTC website they have current events and past events that have taken place that relate to the industry. With that said I'd like to go over some of the most common scams to avoid when considering a consolidation company.#1. You'll want to consider a company that is going to look at your complete financial situation. If a company is not interested in getting an overall picture of your financials, then consider this a red flag. You'll want a company that offers a wide variety of services and not just consolidation services.
#2 You'll want to continue paying your bills until you've gotten correspondence that your creditors have approved whatever plan was negotiated. Companies that are out to scam you will not make the payments for you. Even if you think you have found a reputable company, you may still want to consider checking up on these accounts to make sure payments are being made.
#3 Be weary of companies that make promises such as "reducing your debt by 50 to 70 percent" in a short period of time. These claims are nothing more than misrepresentations. The fact is that if they can't provide this standard for anyone and everyone, such statements should not be made to the public.
#4 Be cautious of companies that recommend that you discontinue making payments to your creditors and explain that everything will be taken care of in exchange for a monthly fee. Again, you'll want to get confirmation from your creditors as to any agreements that have been made. If nothing else, get it in writing! Make records of everything in case things go south. One thing you may want to do is find out from your creditor before hand if they would work with a particular company. Your creditor may be able to provide some valuable information to you.
#5 A big red flag are those companies that claim that they can get negative information removed from your credit report. This is another one of those misrepresentations that the company should not be making. Be aware that credit reporting agencies are not required to remove information that is factual information, be it negative or not. As a good deal of negative information is actually true, the company would be stating a false representation in order to lure you in.
Don't Consider Credit Card Consolidation Until You've Got These 5 Things Down