If you’re feeling really anxious over your debts, it’s possible that your judgment could become clouded. You could make mistakes like starting to grasp at straws or doing something foolish that you would never do if you were thinking clearly. For example, you could fall prey to a dangerous debt consolidation offer. There are options out there that are incredibly expensive and possibly even scams. Here are some of the worst to look out for.
Debt counseling firms that want to lend you money
Be leery about any counseling company that says it will lend you money to pay your debts. The money they’re so anxious to loan you will have a outrageously high interest rate. You may also be forced to use your home as collateral. This means that if you were to default on your loan, the company could take your house.
Finance company loans
You’ll see or hear advertising from these companies that make their debt consolidation loans seem like the greatest thing since sliced bread. Well, they aren’t. These loans will have a high interest rate and outrageous fees. If you borrow money from a finance company it can damage your credit history.
Companies who promise to lend you money without asking questions
If you run into a company that promises to loan you a lot of money without asking any questions but says that in return you must pay a substantial upfront fee, run do not walk away. No responsible and ethical lender would promise this. These companies will not only charge you a high percentage rate, they may also put a lien on some asset you don’t want to lose including your home.
Companies that offer to get a loan and use it to pay your creditors
This is an area where it’s easy to run into scams. These are companies who tell you they have gotten a loan and are using the proceeds to pay your creditors. You start sending them money to repay the loan but the company never gets a loan or doesn’t pay your creditors. It can be several months before you realize you’ve been scammed but by then you’ll probably be in worse shape than when you started.
Know the company by its customer reviews
Before you sign up with any debt consolidation company, go online and look for reviews that have been posted by its customers. Be careful if you find only positive reviews because this means the company may be submitting them itself. The nature of the debt consolidation business is such that no matter how hard a company might try to please all of its customers, it will fail. But a legitimate debt consolidation company will have many more positive than negative reviews.
Its history and associations
It’s also good to determine how long the company has been in business. If it’s been in business for a year or less, you might want look elsewhere. However, if it’s been in business for 10 years or more, it’s probably legitimate. You should also look to see what associations it belongs to. A trustworthy debt consolidation option such as Debt Consolidation USA will belong to well-respected associations such as the US Chamber of Commerce and the International Association of Professional Debt Arbitrators.
Look for its guarantee
In choosing a debt consolidation option, you should also check to see what if any guarantee the company offers. For example, in the case of Debt Consolidation USA, its debt relief providers have an easy-to-understand 100% satisfaction guarantee. They are so confident they can help you become debt free in a reasonable amount of time that if you are ever dissatisfied with the debt relief programs they recommend, you can cancel out without paying any penalties or fees.