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Tips to avoid debt management scams and stay financially fit

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By: Anonymous
on 18th Apr,2014

Debt management plan helps you clear your debts without filing bankruptcy.
Tips to avoid debt management scams and stay financially fit


Debt management plan helps you clear your debts without filing bankruptcy. A lot of debt management companies have sprang up in the recent years to help consumers get out of financial crisis. They offer realistic solutions to the consumers' debt problems.

However, in the midst of the mounting credit crisis, scammers have opened fraudulent debt management companies to take advantage of desperate consumers' financial problems. They are just economically exploiting consumers in the name of providing debt relief services to the consumers. This is why it is important for you to detect the scammers and avoid working with them. Read on to get acquainted with some useful tips that may help you avoid being victimized by the debt management scams

Tips to avoid debt management scams

Here are some effective tips that can help you avoid debt management scams and stay financially fit:

1. Exorbitant fees: If a debt management company charges extremely high enrollment or consultation fees, then avoid working with them. According to the debt experts, the fees charged by the standard debt management companies usually vary between $50 and $100. So, you should ask the representative of the management company about their fee structure and the type of services they will be providing you. Stay away from the companies which ask you to make voluntary contributions.    

2. Vague information: A reliable debt management company will ask you reveal important financial information such as your debt amount, creditor's name, account status, income, expenses, interest rates, monthly payment amount, etc. before providing you with a solution. They will need these details to figure out your minimum monthly payment after your enrollment into the debt management program. So, if a company provides you with the estimate of the payment without analyzing your financial situation, then know it is a scam.    

3. Inadequate testimonials: You can discriminate between the good and fraudulent debt management company by going through the client testimonials. A good client testimonial indicates that the company is a genuine one. However, the lack of good testimonials is a clear sign of scam. So, you should always work with a company that has good testimonials and always strives to satisfy their customers to the best of their ability. 

4. Verbal agreement: If a debt management company tells you to make payments based on verbal agreement, then you should cease working with them. The reason is, there have been instances where the customers have not received promised services even after making the required payments. Some debt management companies even have not disbursed consumers' money to their creditors. To avoid this, always make sure you get a written agreement from the debt management company. Check whether terms and conditions of the written agreement are as per your discussions with the company.  

5. Lack of credentials: Check whether the company is affiliated with National Foundation for Credit Counseling. A fraudulent company will never be affiliated with this organization.

Finally, scammers are not able to continue their businesses for a long time. However, they often open companies in different other names. So, when are looking for a debt management company to manage your debts, you should work with a company that have been in business for several years.

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