In this difficult economic environment, the debt consolidation industry is growing rapidly. Everyday more people are being laid off, this is the worst economy since the Great Depression in the 1930s. Many people have found themselves in the position of not being able to meet their monthly expenses, and have debt collectors hounding them. Often, debt consolidation services can be the solution you are seeking. But make sure to research the companies you are considering doing business with. Unfortunately, as the number of people seeking help has grown, so have the number of people looking to make money out of the situation. If you find yourself in the position of having too much debt and debt consolidation sounds like it might be right for you, there are several steps you need to take to avoid being caught in a debt scam. The first step in getting a debt consolidation loan is getting quotes from various companies. Quotes should be free. If a company is looking to charge you a fee at this stage, move on. Also, when you are getting a quote, the only information you need to provide the company with is a list of your creditors, the interest rates you are being charged, and your outstanding balances. No company should ask you for your social security number or any account numbers or other private information. If you are being asked for this information to provide a quote, you should end the call and cross that company off your list. After you have signed up with a debt consolidation program, you will have to provide that level of information in order for the company to be able to work with your creditors. For the purposes of a quote, it is not necessary, and could open you up to identity theft or other fraud. When you are comparing different debt consolidation companies you should expect to get similar deals. If one company offers a significantly lower interest rate it isnt necessarily your best option. Often in this situation, the company will be charging you a higher interest rate. Over the long term, this can wind up costing you more money. You need to look at the payments, interest rates and fees in order to accurately compare companies. Are there hidden fees that are incurred over time? Is the company charging and up front fee? Will you be paying fees in addition to your monthly payments? When you are offered a contract, read it carefully and make sure you understand what you are signing up for. Can you cancel down the line? Are there fees associated with cancellation? Are you entitled to a refund of any fees? Does the contract guarantee a specific percentage of settlement? (It should.) If anything looks suspicious or confusing, dont sign! Often, when you call a debt consolidator they will try to sign you up immediately. Many companies offer their employees financial incentives based on the number of new accounts they sign up. Remember, the person on the other end of the phone does not necessarily have your best interests at heart. Evaluate your options before making any decisions. No matter how dire your financial situation may be, it is important to make a logical decision based on research, not emotion or fear. After youve gotten quotes and reviewed contracts, it is imperative that you research the companies you are considering. Contact your states Attorney Generals Office. Check with the Federal Trade Commission. These agencies can provide you with useful information. Check the Better Business Bureau to see what types of complaints, and how many, have been filed against your list of companies. If the company is not reputable, you are very likely to be able to make that determination from these three sources, but it certainly doesnt hurt to take the additional step of doing an internet search. Enter the name of the company you are researching into the search engine of your choice. This will give you an idea of how the general public feels about each company. Remember, if you are pressured into signing up with a company because of a hard sell, you may find yourself with an even bigger problem than you had going into this. Take the time to evaluate the companies you are considering and what they are offering. Read everything carefully. If you dont understand something get clarification. Know what you are agreeing to before you sign. And if you find that you are unable to make heads or tails of the situation, dont be afraid to seek the advice of an independent financial expert.
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