Debt Consolidation

Three Most Common Scams Of An Unscrupulous Debt Settlement Company

If you are considering using the services of a , it is very important for you to understand that the programs offered by such companies are not meant for everybody. Before you sign up for this type of program, you must first review the various aspects associated with it. Only then you will be able to make an informed decision if it can really be the right option for you. Besides that, the problem only gets worse when we add to it the reality that many of these companies are unscrupulous and scams with the only objective to make money from you. Therefore, unless you know how to differentiate between genuine services and scams, going for these programs can be a very risky affair. Even if it is a genuine company, there are still going to be some negative effects on your finances, especially on your credit history and FICO score. You must be wary of those organizations that only explain the positive aspects of these programs and completely skip its negative effects. Most companies will try to mislead you. So, you have to be very careful. Following is a brief rundown on three most common types of scams.

Misinformation

A debt settlement company may just tell you half of the story by feeding you with things that you want to hear, such as instant enrollment, quick settlement, low monthly payments, affordable programs, and other things like that. Some companies even try to manipulate information and feed you with false details. Always remember, whether a company is trying to hide some details or telling lies about certain parts of the program to attract you, both are scams. A reputable organization must show you a clear picture about both positive and negative aspects of the program.

False Reports

An unscrupulous debt settlement company may also send you false reports, telling you that your creditors are being paid in a timely manner while in reality they are not at all paying to your creditors or not paying in full. It is very important for you to keep your senses active while you use these programs. You must do frequent review of the statements from your creditors to find out if they are being paid or not.

Low Monthly Payments Often Means Longer Repayment Period

The best debt settlement company is the one that tries to get your debts settled as soon as possible, generally within three to six months; this may mean a one-time huge payment or high monthly payments for several months. If you cannot afford it, you may find those programs quite attractive that ask you to make very low monthly payments. But, it is important to note that such programs often include a very long repayment period that may range from two years to as long as five or six years. If you go for these programs, the chances are that you will end up getting sued by your creditors. A better alternative is a , not settlement. The settlement of debt is a process that requires you to pay a certain amount of money either as a one-time lump sum or in installments for 6-12 months but only up to 30-60% of the total outstanding balance. Once you pay off the same, the remaining debts are written off.

Despite the possibilities of scams, it is important to note that not every debt settlement company is fraud. There are several genuine companies also that can help you get rid of your debt problems; it is just that you will have to do a lot of research to find such companies.


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