It often seems that the worst tends to come out in people when others are emotionally raw or financially exposed. This is how some individuals get pulled into debt consolidation scams.
A statistic published by the personal finance website ValuePenguin in April 2018 captured how most Americans carry on average $9,300 in credit card debt. Interest rates mount the longer a balance goes unpaid. If you regularly keep your cards maxed out, then your credit score is bound to drop. If it does, then this may limit the financial opportunities that you have available to you.
Debtors often turn to debt consolidation as a way to consolidate their debts, reduce their interest payments and to lower their monthly payments. This is generally when they get scammed.
There are three warning primary warning signs that you should be on the lookout for before deciding to work with any debt consolidation company.
It should raise a red flag if they ask you to pay upfront fees to have them help you consolidate your payments into one. It's normal for a company to charge a small account maintenance fee to manage payments from a dedicated account that you've set up. It's not typical for them to ask you to pay a separate lump sum upfront to just get started with this process though.
You should also avoid working with any company that claims to have a special government program that they can sign you up for. The Federal Trade Commission deems all such marketing tactics as false advertising.
It's important that you also avoid working with companies that tell you that they can help you pay your debts off for less than what you originally owed. You can permit them to reach out to your creditors to get them to reduce what you owe, but they may not be willing to do this. They should never guarantee that this will happen.
If you're going to work with a debt consolidation company, then you'll want to find one that is upfront and honest about the fees that they charge and the risks associated with reducing your balances this way. A debt relief attorney in Medina can advise you of the many different options that will allow you to get a fresh start here in Ohio.