Debt Consolidation Precautions - An Article By America Debt Consolidation

It’s important to be cautious when signing up with a debt consolidation company. Unfortunately, the modern consumer’s demand for debt consolidation has led opportunist scam artists to exploit consumers needs—either by stealing from them, or by failing to take the action necessary to restoring their credit, resulting in additional, sometimes irreparable damage to their credit reports.

There are several warning signs that a particular firm does not have your best interests at heart. When it comes to establishing a relationship with a credit consolidation firm, the following factors and terms are highly suspect:

You are asked to provide account numbers before you are even offered a quote.
You are asked to pay an up-front fee in the form of a “phone check” or “demand draft” in exchange for a credit analysis.
They take payment for an up-front fee before providing additional services to you.
After your phone orientation a “credit analyst” calls you and tries to sell you “an education program” or other instructional materials, which you would receive along with a disclosure form to sign and multiple applications for credit cards each of which requires a deposit or application fee. You may be asked to pay up to $1K or more for this program and to make payments by phone checks or regular checks.
You are offered a highly diverse range of services. This is a sign that the firm is having internal problems, since debt consolidation firms are normally highly specialized.
The firm asks you to pay by cashiers check or money order only.
The company will only send you a client contract by fax, rather than by regular mail.

A “servicing associate” contacts you. Servicing associates are acting just marketing agencies that will sell your contact info to other corporations.

"While there are some unscrupulous folks present in the field, debt consolidation is still a safe and reliable means of digging yourself out of debt."

The following are additional warning signs that a debt consolidation company may be looking to take advantage of you:

A representative from the firm keeps you on hold while they check your approval status OR says he/she going to call you back with your approval statues. They only factor involved in determining your “eligibility” for a debt consolidation plan is your creditors’ willingness to offer better terms.
The counselor tries to convince you to include in your consolidation credit card or credit union accounts that already have low interest rates.
A company offers a monthly payment amount that is substantially lower than other quotes you received AND your debts total an excess of $30,000.
The agency offers a set interest rate before providing a quote of each individual creditor’s agreed upon interest rate. The same is true of payment times.
The debt consolidation organization recommends that you include consolidation of your debts to the IRS. Tax debts must be handled separately.
The company promises “cash back” rewards for your enrollment.
The company calls itself a debt negotiation or debt arbitration service, and will only negotiate your debt (as opposed to consolidating it) yet promises to preserve your credit standing. In actuality, only legitimate consolidation activity will protect or repair your credit standing.
The agency claims they can lower your payment on bank loans by 35 to 50%. Despite their willingness in the past, these days, banks refuse to accept lower payments through debt counseling or consolidation.

While there are some unscrupulous folks present in the field, debt consolidation is still a safe and reliable means of digging yourself out of debt. As long as you do your homework and stay alert to any red flags, you can successfully achieve your debt reduction goals with the help and knowledge of a reputable consolidation company.