October 26, 2011
/24-7PressRelease/ -- Many people experiencing financial problems may consider the services of a debt consolidation firm. Others may be tempted to take out a loan and combine their debts into one manageable payment. There are indeed some benefits to these practices. Consolidation may allow consumers to escape high interest fees that keep them from paying off smaller debts. Interest on debt consolidation loans can be as low as six percent, while interest on credit cards could be as high as 29 percent. Meanwhile, debt consolidation companies can help reduce troublesome interest and fees on credit accounts.
However, consolidation has its downsides; especially when offered by unscrupulous companies intent on taking advantage of vulnerable consumers. It may be surprising to some, but not all debt settlement firms are created equal. Desperate consumers are told they can be debt free without the stigma of bankruptcy, only to be left worse off financially than they were before. This article offers some tips to those seeking to combine their debts so that they may avoid debt consolidation traps.
If it sounds too good to be true, it usually is. - The old adage you learned as a kid still holds true today. There are thousands of shady debt elimination scams out there that claim to wipe out your debt just by paying a certain fee. The truth is, no company can eliminate debt overnight. In fact, creditors rarely (if at all) favor one debt consolidation company over another, so the potential savings should not be very different among firms. If a company tries to lure you in with stories of reducing debt by 60 percent or helping consumers avoid bankruptcy, be skeptical.
Understand the fine print - Debt consolidation loans (also known as "easy" loans) are geared towards consumers with spotty credit histories. While low interest rates may be attractive, it is important to understand the duration of the loan, as well as the penalties that may accrue should you not be able to pay it off in time. Some loans may continue indefinitely while others have unrealistic payment periods. Make sure all terms are explained in plain language and appear in the loan documents.
Do your homework - As stated before, many dishonest businesses hold themselves out to be saviors working in your best interest. They may even have emblems showing themselves to be certified by the Better Business Bureau (BBB) or American Association of Debt Management Organizations (AADMO). Remember, these certifications enable firms to enter the field, and are not accurate representations of their ability to help consumers. Those truly interested should check with the state Attorney General's office or the Federal Trade Commission before they work with a debt consolidation firm.
The preceding is not intended to be legal advice. If you have questions about debt consolidation and its legal implications, an experienced attorney can advise you.
Article provided by Derren S. Johnson & Associates
Visit us at
www.derrensjohnson.com---
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