Avoiding Debt Consolidation Gotchas

Debt consolidation can be a real opportunity to repair your credit or just get your high interest credit cards all under one, single monthly payment.

There's plenty of debt consolidation firms that can help you consolidate your debts and solve your debt problems, but you have to be careful. Unfortunately, not all debt consolidation companies have your best interests at heart.

There are such a thing as debt consolidation companies only looking to make a quick buck off of you. They figure that people with debt problems are under a lot of stress and are more apt to overlook the fine details, like the loan terms. As a result, you might find yourself under an even bigger pile of debt. This is because many scam companies will charge high up-front fees and other bogus charges. Be careful, as they will guarantee that your debt problems will go away.

There is a way to avoid these kinds of scammers, however. Give yourself time to examine all the details and don't sign your name on anything until you know what you're signing.

There's a few common debt consolidation rip-off techniques you should be aware of, so that you can easily avoid them.

Too Good To Be True Monthly Payments. A typical debt consolidation company will negotiate with your creditors in your favor, usually getting a predetermined lower rate reserved for this kind of thing. Expect just about the same deal from every other debt consolidation company.

If you get an offer from a debt consolidation company that has monthly payments that seem too good to be true, be wary. This is a common ploy used by unscrupulous companies that's used to suck you in. Once you're enrolled in their program, they will hit you with hidden high fees.

Avoiding this is easy, instead of looking at the monthly payment keep your eyes on other fees. Dig closely for hidden costs, you're bound to find them lurking in the documents somewhere.

Outrageous Up-Front Charges. Rip off debt consolidation companies have been known to incur high hidden charges after you have enrolled in their program, up to and beyond $1,000's+. Some scam companies will tell you they will refund your money after you finish their program, but most clients never finish it.

Real not-for-profit debt consolidation companies will usually charge a low monthly amount for every credit account held. Other legit for-profit debt consolidation firms will quote you a fairly competitive fee, as well as a low monthly charge.

The easiest way to find out if the company you are dealing with is a scam is to research them online. Check them out on the Better Business Bureau - here you can read if they've had any recent complaints. If the company has a bad reputation, you will find out for sure here.

A real debt consolidation firm will be able to give you a fair quote just by knowing the balances and interest rates of your debts. If a debt consolidation company starts asking for your SSN# or other important personal information before they can give you a quote, beware.

A good debt consolidation company will give you a viable solution to your debt problems, as well as handle any questions or concerns you might have about the overall procedure.