Avoiding Debt Frauds
Everywhere in the world today, people are becoming submerged in debt. Everywhere you look, it is possible to purchase today and pay tomorrow, consumers are steadily falling into this trap everyday, and before they know it, they are so far in debt they are unsure how to get out. This is where debt counseling comes in; however you need to be made aware of debt counseling frauds. Some are only in place to take your money.
Legitimate debt counseling companies do not claim to be not-for-profit if they are not. There have been cases where a company has claimed this and ended up swindling their client’s money. There are ways to protect yourself; you should check a debt counseling company’s reputation thoroughly before investing your time and effort into them.
Never conduct business with a company that requires any upfront fees or asks you for voluntary contributions. This is a red flag, legitimate debt counseling companies advise you on money management, budget development, debt and educational material and occasionally workshops.
Essentially, it is none of their business regarding the details of your situation or requires you to be approved. They should discuss your financial situation and help you in developing a plan to eliminate the problems.
You can also check your local government agency or better business bureau, to ensure that they are indeed legitimate and no complaints have been filed against them.
The other things that will tell you rather or not a debt counseling service is legitimate include the following things. If they promise lowered payments, leave, only interest rates can be lowered not payments. If they ask you for your account numbers prior to giving you a quote, this is not necessary at all. If they group the quotes together instead of giving you a breakdown of how each creditor will be handled, this will leave you with no idea of how long it will take to pay off each account.
There are also questions you should always ask when choosing a debt counseling service. These questions should include charges for educational material, a disclosure in writing of fees that are charged, if they are properly licensed to do business in your area, what will happen if you cannot afford their fees, what type of services do they offer and if the counselors are certified and who certified them. This is your money and your financial well-being, do not leave any stone unturned.
There is a new bankruptcy law that makes filing bankruptcy harder for everyone. To file a chapter 7 will be nearly impossible if you are currently employed. They have formed a test that you will have to pay showing that your income is less than the median income for your area. Along with these new laws, it has become required to obtain debt-counseling services when filing bankruptcy.
Choose the debt consolidation company very carefully and ensure they are legitimate. You do not want to cause more harm or damage to your credit, so choose reputable companies wisely.
Quite a significant number of people find themselves in a situation where they’re faced with mounting debt and not nearly enough income to meet their monthly financial obligations. Obviously, those individuals faced with financial difficulties have no choice but to find the best solution to become debt-free, and put their money worries behind them. Many find their search leading to debt settlement, which has been growing in popularity in recent years.
Unfortunately, there happens to be a good deal of misinformation floating around, regarding the process of debt settlement, and if you’re considering this route it’s important to be well-informed. For instance, I recently read an article whose author claims that once you pay your agreed settlements in full you’ll have a “good credit rating.” The author should have gone on to explain that, yes; your credit score will improve, but only after your accounts are reflecting zero balances on your credit report. This process is not instantaneous, and can take several months. While I’m a supporter of debt settlement for individuals who are on the brink of bankruptcy, I also think it’s important to know the facts before you make your final decision regarding the best way to resolve your credit accounts.
I also recently came across some information that happens to be a complete fabrication. One author claims that debt settlement companies convince your creditors to “re-age” your accounts so that they appear current. This is simply not true, nor has it ever been true. Debt settlement companies simply negotiate with your creditors to settle your accounts for less than the full balance – usually 50% or less. There’s no need to re-age the account (nor will creditors agree to do so) during the process of debt settlement.
I’m sure you’ve heard the consequences relating to debt settlement, such as a possible tax liability, as well as a decreased credit score. Both of these are indeed possibilities.
So that you can breathe a sigh of relief, it’s important to conduct sufficient research so you’ll be well-informed before jumping into a program with which you’re not familiar. There are several debt settlement companies that don’t require large up-front fees, or even require that you make monthly payments to a trust account. These same companies will work on a contingency basis, meaning you don’t pay for services rendered until a satisfactory agreement has been reached with your creditor. Beware of companies who seem to be more interested in collecting your money than legitimately helping you to resolve your finances and overcome your financial hardship.
How to Get Out of Debt
For many credit card holders, credit card debt can put a damper on what would have been a quick fix to financial woes. High credit card interest rates can lead to substantial credit card debt for millions of individuals and families around the world. It is far too easy for credit card holders to find themselves falling into credit card debt. High credit card interest rates are not the only factor that leads to a surplus of credit card debt, the high expenses people must cover in order to get by in their everyday lives lead to the general public seeking financial help. Credit cards seem like an easy answer, allowing customers to buy things now and pay for them later. However, if put in the wrong hands, credits cards can lead to even more financial trouble than the customer was already in.
There are a number of companies who capitalize on the large amount of credit card debt that can be found throughout the country and the world. These companies claim to have all the financial solutions customers who are in debt are looking for. How many times have you seen advertisements for companies claiming to get you out of credit card debt in five easy steps, or claiming to help you eliminate credit card debt in just months? The claims seem promising to people trying desperately to get themselves out of the throngs of bad credit. However, not all these companies can be trusted. It is important for any customers tempted by these get out of debt fast claims to first research these companies. Many companies simply use these empty promises as a way to prey on those who have already established bad credit and seem like easy targets to get quick cash from.
But do not worry, you do not have to fall victim. If you are tempted to employ the services of a company offering credit card help, be sure to do your homework. Research the company; try to find former customers to talk to, and make sure that your money will be spent wisely - helping you get out of debt. In far too many cases people who are already in financial trouble find themselves falling in further debt after being scammed by companies who claim to have all the answers to getting out of credit card debt. In fact these companies simply offer useless tips while scamming customers out of even more money. In fact, some debt help companies do just the opposite - cause further debt for their financially troubled customers. Customers who are well informed and ready to find the right company to help them get out of debt will be able to spot frauds right away and employ the services of a company that will offer valid assistance rather than a hoax.