Recognizing Debt Consolidation Scams

A debt consolidation offer can appear to be a gift from heaven when your monthly payments are threatening to become unmanageable.

However, there are people out there who know how such offers can be received and try to use this knowledge to profit at your expense. With that in mind, these tips for recognizing debt consolidation scams will help you find legitimate offers and avoid predatory ones.

It Sounds Too Good to Be True

“You’re guaranteed to qualify for this zero percent offer on any amount you transfer.  This will completely eliminate your debt in as little as 12 months.”

owever, when you stop to think about it, how can anyone guarantee you’ll qualify for a loan when they haven’t reviewed your credit history, income or outstanding obligations? Whenever something sounds too good to be true — you can safely bet it usually is.

Watch Out for Upfront Fees

Yes, personal loans and credit card consolidation deals can entail fees. But anyone asking you for money before you’ve qualified for the loan or the card is out to rip you off.  

Again, balance transfer fees and loan origination fees are commonplace, however these are always assessed after you’ve qualified and signed the deal. No legitimate company charges a fee to consider you for a loan or a credit card in the first place.

Details of the Deal Are Sketchy at Best

You’re asking questions about the terms of the deal and they’re saying; it’s all boilerplate, cookie cutter stuff.

 The main thing here is your monthly payments will go down by a significant amount, “you’ll pay no interest for a year and your credit score won’t suffer. Don’t worry about the rest, we’ll take good care of you.”

Which is criminal-speak for, “Will you please just shut up and give us the money, so we can get this scam done and go on to our next victim?”

No Interest is Shown in Your Credit History

As we mentioned above, every legitimate lender or credit card issuer in existence is going to want to check your credit history and verify your sources of income are both steady and sufficient to make the monthly payments.

Scam artists have no interest in any of these factors because their goal is to get you to give them a large fee for their “services” or to gain access to your personally identifiable information and use it to commit fraud. Anyone saying they’re doing debt consolidation and expressing no desire to review your finances is a crook — period.

Key to recognizing credit card consolidation scams, these behaviors are always associated with criminal intentions. Should you encounter anyone engaging in any of these actions, walk away from the deal, they’re trying to rip you off.

Moreover, always check with the Better Business Bureau, as well as the office of your state’s Attorney General to see if any complaints have been lodged against the company making the offer you’re considering.