Debt management: Getting started
Debt Management has become a huge business, and the fact, you don’t need a middleman to negotiate interest rates and repayment plans with your creditors. However, if you decide to choose this particular resolution to your debt problems, there are many legitimate debt consolidation companies providing help to financially distressed consumers. But as with any product or service you choose, it pays to do your research before you choose a debt management company to assist you with your finances, as there are many debt management scams targeting unwary, uninformed and distressed and desperate consumers. As you conduct your research, be sure to look for the warnings.
Is it too good to be true!?
Remember the cardinal rule: If it sounds too good to be true, it is! Beware of companies that offer exceedingly low monthly payments. A debt consolidation company works diligently with your creditors to negotiate interest rates.
Legitimate debt consolidation companies should give you about the same rates as your respective creditor. A company that quotes a low monthly payment is doing so to get you to sign up. Once they have you, they will raise your rate. So instead of comparing monthly payments, request and compare their fees and other associated charges that will explain hidden costs you may end up incurring later.
Protect yourself from scams
Beware of upfront fees and other charges, as this is one of the most common scams consumers fall prey to. Some charge thousands up front, claiming that the fees will be refunded upon completion of their respective program. Likely, clients will not complete the program. The best way to ensure you are working with a legitimate debt consolation company is to check with the Better Business Bureau at bbb.org. That can provide data and information on how many complaints have been filed as well as the reason for the complaint.
Be aware of your private information
Also, be extremely wary of a company that asks you for your account numbers up front. Just as no legitimate bank or creditor will ask for confirmation of personal and private information, such as account numbers and PIN numbers via e-mail, debt consolidation companies shouldn’t either. Beware of debt consolidation or debt management companies that ask for this information up front. A legitimate company will be able to provide you with the specific charges and fees for each of your creditors by just knowing who they are.
Finding the right debt consolidation company
Reputable debt management/consolidation companies will answer your questions up front and provide assurance and verifiable information about the actual benefits of their respective plans. Arm yourself with knowledge and be sure you are comfortable with all terms, conditions, fees, etc. before signing any agreement.