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Shady Debt Consolidation CompaniesA recent articleon Bankrate.com by Lucy Lazarony outlined some of the shady practices used by some debt consolidation companies. There has been a great increase in the number of these companies in operation of late, and many of them adhere to the same nefarious business model: promise clients to help with their credit card debt, charge exorbitant fees and fail to help clients reduce debt. In the end, debtors are left much worse off than before they started. Some of the practices used by shady debt consolidation companies include:
Often, debtors will come to a debt-relief firm with a fairly good credit history. These folks just need help reducing their debt. They may owe a lot, but they aren't necessarily on the verge of bankruptcy. The debt consolidation company, promising a quick and easy fix to their debt, actually leaves debtors in a much worse position. Basically, these companies prey on the hopes and fears of honest citizens who may have made a few bad financial decisions. Lazarony notes that complaints against these types of scams are growing: "In 2000, complaints against credit counseling and management agencies totaled 404, and complaints against debt-consolidation companies reached 653, according to the Council of Better Business Bureaus." But things have gotten much, much worse since 2000. Complaints against credit-relief firms and debt-reduction companies have skyrocketed as the debt management industry becomes saturated with dubious businesses. As a consumer in need of debt relief, you have one major tool in your arsenal: research. Search tirelessly online for information about debt-relief companies. Don't engage the services of a debt consolidation firm until you're certain they are reputable and have your best interest at heart. Author Bio: Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. Read additional articles by Drew on Debt Management, Credit Management and more.
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