Upfront payments? No way!

Listen, there are both good and bad debt consolidation companies out there. Unfortunately, a few bad apples have spoiled the whole bunch, causing many people to believe that all consolidation companies but bad. But that’s simply not true. That said, there are many scams out there that some fraudulent debt consolidation firms try and run, usually via the Internet. The oldest one in the book is charging an upfront fee for debt consolidation. This is illegal! Now, companies can charge you for services like, say, debt counseling, but they cannot charge you a fee upfront simply for consolidating your debt. If there is a fee tied to the debt consolidation, you will be charged after the company helps you through the consolidation process. Otherwise, they are simply running a scam and you are paying money for a service that you’re probably never going to receive.

Closing fees? Uh uh!

Just like the initial upfront fees, any “closing” fees that a debt consolidation firm may try and charge you is also likely to be a scam. Why, after all, should you have to make a payment to a credit lender just to consolidate your loans with them? If there is any sort of fee for this, it will be included in the overall fee for the consolidation services. But you should not have to make any sort of payment to complete the consolidation. Companies prey on consumers who are anxious to get a deal done or who act too quickly without researching such scams. The best way to avoid these sorts of scams are to do your research and understand how the entire process works. With this knowledge, you can avoid any problems in the future.

How to spot a scam

In general, if you are thinking about debt consolidation, ask around and find a friend who has been through the process. Likely, he or she will either have a story about how great a company was or how bad a company was. Even if you don’t find a specific company through them, you will know the warning signs and know a little bit about how the entire process should go. Again, many debt consolidation companies have bad reputations because of the few companies that do not operate properly and run these types of scams. The key to avoiding them is to know what you’re doing going in so that you’re not susceptible to getting caught up in a web of lies and deceit.