How to Avoid Debt Consolidation Scams

Featuring Kathryn Bossler, Financial Wellness Expert

If you’re in significant debt, the prospect of becoming debt-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.

7 warning signs of a debt consolidation scam

When 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 of 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 with GreenPath Financial Wellness, a nationwide consumer credit counseling agency.

“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 clients,” Bossler said. “We always think it’s best to leave those lines of communication open.”

Continue here to read the entire Lending Tree article.

We Can Help You With Free Financial Coaching

GreenPath offers free financial counseling and education to support people in paying off debt. Our professional, caring coaches will explain your options, including paying off your debt on your own or using a Debt Management Plan. They’ll support you to develop a personal action plan that works for you.

Call us today to find more about how we can help start your new year off right, with less worry and debt.