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When choosing a debt reduction company be wary of the scam merchants
Any person who has financial problems and is looking to use a debt reduction company should make sure that they understand the relevant laws in the countries they reside in. The Fair Debt Collection Act is the one for the United States and if you are in debt in the United kingdom then it is highly advisable that the Consumer Credit Counselling Services are contacted.
These days a lot of debt collection companies make promises that it is easy to quickly get out of any financial problems that you may have. They target the most needy and desperate as they know that these people need to turn things round really quickly so will probably accept the first offer that is put onto the table.
So how do they do it
These credit consolidation companies advertise their services stating that they can easily solve financial worries with a debt consolidation program. Often though there are hidden fees for services that are not really required when taking on a debt management program. Another option they also use is to offer a guaranteed no credit check low cost loan.
Many times a very high upfront fee is required which will be forfeited if the loan application is subsequently rejected due to an unforeseen circumstance. Debt consolidation companies will often offer to consolidate all of the debt together into one larger loan but charge a much higher interest rate than the one you have already for your other loans. A majority of times these loans are only offered if there is a charge put on your property.
Warning signs to look out for
A debt reduction company that has an offer, which normally includes an upfront fee to completely erase a bad credit report. Unfortunately the only way that a credit file can be repaired is through a frequent payment of money to creditors over a length of time.
A final warning and this can be very serious for anybody who partakes in this. Individuals and sometimes companies will hold a seminar and during this they will explain that there is a kit that can be purchased. These people are then told that the contents of this kit will help them to pay off any mortgage or other debts that they may have.
There is often a charge of between $300-$500 for these kits and the contents include items that look very much like checks. They actually are named certified drafts and the buyer is told that these drafts can be issued in any amount. They are actually worthless and any person caught using these to pay off any loan or mortgage can actually be prosecuted for fraud.
The conclusions that can be drawn are that many credit consolidation services look to try and befriend a person and get them to believe that they alone can help to cure their financial woes. This phoney friendship is only built so that the person involved puts all of their trust and faith into this company.
As soon as the trust has been gained, the debtor will have all of these too good to be true products thrust upon them by the credit consolidation companies. This is the time to walk away and seek out further advice from a more reputable source.
Total Views: 926 | Approx word count : 562 | 09/12/2010
Financial problems will affect nearly everybody at some stage in their lives. It is vital therefore that a knowledge of relevant laws and what to look out for when dealing with any credit and debt consolidation companies. For more information and advice please visit www.creditdebtsolutionsnow.com
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