Did you know that, overall, 3.3 billion people live in countries that spend more on interest payments than on either education or health?
While debt consolidation is a great way to stay organized and one of the best means to effectively pay off your multiple existing debts, just like any other financial option, it comes with a few cons. The big one is the scams within the industry.
In this blog, I will share with you how you can avoid the debt consolidation schemes in the industry.
[1] High-pressure sell tactics
If an organization is utilizing aggressive sales tactics to coerce you into working with them, you need to walk away right there. The legitimate organizations will never ask you to work with them and strongarm you in making decisions that you are not comfortable in making. Instead, they will give you the time to thoroughly understand the conditions and terms of a debt consolidation loan.
[2] An upfront payment
I suggest you say NO to any kind of upfront payment. If you are going to a legitimate financial company, it is fine to pay for the service. However, for any profit-debt settlement, companies will sometimes seek high upfront charges. It should be a warning sign as you have not received any kind of help in decreasing your debt.
Irrespective of whether it is setup-free or any other way to charge upfront fees, watch out. No matter what the organization calls it, if they are asking for upfront payment, I am telling you that there is a good chance that you are walking into a scam.
[3] They reach out to your first
Legitimate debt consolidation loan companies do not usually do not cold call or email any prospective customers. If you have received unsolicited messages or mail from a debt relief company, I urge you to ignore them.
[4] You are asked to stop paying the bliss
In general, ending every contact with the creditors when you owe them money is in no way a good move; in case you are struggling to make payments or are buried in charges, you should always feel free to contact the creditors to explore any kind of potential options. Ending contact may lead to unpleasant surprises down the road, such as the chance of legal action.
There are times when a debt consolidation imposter will tell you to refrain from paying your monthly bills and send out the monthly payment to them instead. These entities use this tactic to pressure the creditors to settle faster, but the most likely outcome is that the amount will be provided to collections.
[5] Personal information
You have to be wary of the companies who ask for any kind of upfront for sensitive personal information such as bank account details and Aadhaar number. It is understandable that legitimate companies might require some information for the application, but they do not push for it right away; it is vital to safeguard personal information and only share it with verified and trusted entities.
[6] Wrapping Up
With this, I leave you for today. These are some of the signs you have to look out for when you are considering a debt consolidation loan. Also, make sure to do your deep research and check out online reviews of companies before you make a decision.