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How to Avoid Debt Consolidation Scams

 

If you're in significant debt, the prospect of becoming rent-free can be alluring. So alluring, in fact, that you might find yourself caught in any number of scams along the way. 

One common way to pay off debt is through consolidation. This involves combining all your debt and taking out a loan that goes toward paying it off each month. Debt Consolidation can help simplify and streamline the debt payoff process, and it might even save you a little bit of money, too. 

Still, the debt consolidation industry is rife with scams. Companies might say they offer debt consolidation when, in reality, they're for-profit debt settlement companies looking to take advantage of people. 

Warning signs of a debt consolidation scam 
When you're searching for a way to consolidate and pay off your debt, you might come across companies online that promote debt consolidation. 

But some of these companies aren't offering to help you with debt consolidation. Instead, they're debt settlement companies masquerading as debt consolidation companies, and they're looking to take advantage of you. Debt settlement can be legitimate, but it's an industry that is full of scams. And even when it is legitimate, it's a serious step that can hurt your credit for years. 

Below, you'll find a handful ways to avoid debt consolidation scams. 

You feel that the company's actions are pushy or aggressive 
If you get a pushy or even aggressive vibe from the company, you might be dealing with a scam, according to Kathryn Bossler, a credit counselor. 

"Any legitimate company is going to be able to present your options to you, and you should not feel that pressure to start," she said. 

You're told to cease contact with your creditors 
Another red flag, noted Bossler, is if the company you're considering partnering with tells you to stop communication with your creditors. 

"That's not something we would ever recommend to our client," Bossler said. "We always think it's best to leave those line of communication open." 

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