Debt consolidation loan is a single loan provided by the lenders to those people in debt to cover a number of their existing debts. A good debt consolidation company is able to provide debt relief to debtors. Although it can’t bring instant debt elimination to debtors, it provides a good chance for them to structure their financial plan over a certain period of time and rebuild their financial strength.
Getting drowned in debt is unfortunate. But if you are able to look for the right company, you will be able to become debt free by using the right approach. However, being trapped by unethical companies makes the financial situation worse. We have to accept the fact that the real business world is somehow cruel.
There are many debt consolidation firms and agencies out there that make outlandish claims that they can help to eliminate debts and raise the debtors’ credit score at a fast pace. They have all good artists who pretend as professional financial consultants. They hit their targeted clients with substantial fees but do nothing to solve their innocent clients’ debt problems.
If you are one of the unfortunate victims, what will happen to you? You will not clear all your bad debts off your credit report. Moreover, you will hurt your credit history further.
As a consumer, you must bear in mind that there is possibility for a debt consolidation provider to destroy your credit.
Let’s see some of the tactics:
- Some service providers tell their clients that they are able to help their clients to eliminate all their debts or clear all the bad debts off their credit report immediately. You are reminded to be rational. Don’t believe them. In United States, it is totally impossible for them to do that as it is illegal.
- Some debt consolidation companies are bad as they put their clients back in debt by stealing their identity right after they have paid off their outstanding. The credit rating of the clients will be affected badly when their personal information is being misused.
- Some firms have agreed to provide consolidated loan to the debtors to pay off their debts. They request their clients to sign the confirmation letters. However, they don’t really pay off the debts. In this situation, the debtors get caught in more debts. Their existing debts are not settled, yet they have to bear additional new debt. Again, the credit is badly damaged.
- There are so called “professional” financial counselors in the market that advise their clients to get different social security numbers or change their identities in order to avoid paying debts. If the clients do so, they will definitely be liable under the law and they can end up in prison.
In order to avoid yourself from being trapped by these unethical companies, you are reminded to equip yourself with some financial knowledge. Always be alert and use your common sense. Find out whether the company you have chosen will really benefit you.