Understanding Debt Scams
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When someone is carrying a high burden of debt, they often look for help in many different locations. For instance, they might seek a debt consolidation or personal loan, a home equity loan or even roll all credit card debt into a single low-interest balance transfer offer. Many, in fact millions, turn to debt relief groups for help. While this can often be the wisest choice, the fact of the matter is that each day there are more and more reports about debt scams claiming to offer counseling or relief.
How do they work? Generally, these debt scams promise to reduce balances and interest rates that can save the consumer thousands of dollars. They charge an “up front” fee to take care of the accounts, and then contact the consumer a few weeks later indicating that their credit card companies and debtors were unable or unwilling to negotiate. They then keep the hefty upfront fee and the consumer is even further in the hole.
Does this mean that debt relief and credit counseling groups should be avoided? Absolutely not! There are many consumer agencies offering full details about the valid and successful debt relief groups working with millions of satisfied consumers.
Before jumping into a credit counseling or debt relief program, however, it might pay off for the consumer to assess their current financial situation and see if they can do what the professionals provide all on their own. For example, many people who enlist the help of a valid debt relief company will pay them to contact their creditors, negotiate lower interest rates and balances and then work with them to pay off this new balance as quickly as possible.
Any account holder can actually work to obtain the same results simply by phoning their credit card company and inquiring about a reduction in the interest rate. They can then ask if a lump sum payment would allow for any reduction on the balance. Many credit card companies understand the difficulty of the current financial climate, and are willing to accept negotiated payments that will be viewed as a “paid in full” action.
This is important to note, for instance the many debt scams might offer to contact creditors and negotiate accounts, but these negotiations end with the account holder receiving a negative remark on their credit score. This is something to be avoided because it prevents the individual from receiving access to credit in their future and also creates a lower credit score.
A low credit score may make it difficult to get a loan, but it also makes it hard to get certain jobs, apartment rentals, and even decent rates on insurance policies. This is because all credit scores are intended to be a measure of risk. This is another reason to entirely avoid debt scams; they don’t alleviate debts properly and often leave a credit score in ruins.
So, as a credit account holder you can contact the company, request a better interest rate and ask if a lump sum payment can be agreed to. If this occurs you will then need access to the lump sum. If you do not have that much money in your savings or checking account, you will be able to obtain an easy and fast loan through a payday loan provider. The reason to choose a payday loan is that they do not review or make their judgment based on the data contained in a credit report; instead they look only at the current income of the borrower to establish their ability to repay the sum borrowed in a reasonable amount of time. This is an excellent way to create your own debt relief program.
First you will get a payoff amount from a creditor, borrow the amount needed through a payday loan, and then direct the necessary payments towards the payday loan in order to erase the debt. This process can be repeated over and over until a consumer is entirely free of debt.
There are some limitations for working with funds taken in a payday loan arrangement. For example, the loans tend to be “capped” at roughly $2,000 per loan, and only one loan can be provided to a client at any given time. This means that some organization and negotiation are going to be required, but it can save many people from falling victim to the debt scams offering to perform the same process.
What should someone do if they are the victim of debt scams? That is often a difficult issue to tackle. Reporting such groups to professional business organizations and consumer reporting groups is often a good way to help others avoid such problems.
Additionally there are legal groups, such as the Federal Trade Commission, who will follow up on complaints of fraudulent activities such as debt scams as well.
Doing a little research and investigating any “do it yourself” options will often yield the best results possible where debt and credit issues are concerned.
This entry was posted on Tuesday, July 28th, 2009 at 10:30 am and is filed under Debt Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
