Financial scams involving consolidation of debt

Many people try to get out of debt by applying for bankruptcy, enrolling in credit guidance, or by taking out a debt consolidation loan, but the crisis just seems to be getting worse. The number of Americans who have trouble making ends meet seems to grow every day; we carry more and more debt and have a harder time paying it back. As a result, many are falling for financial scams that involve debt consolidation, hoping for a quick way out of trouble..

Compounding the problem of mounting debt is the growing number of "lenders" who are harming people with debt problems and bad credit. There have been quite a few cases in the news lately of debtors who have been ripped off by late night advertisers that promised to lend money to people with poor credit. The lenders claimed that they would loan money to "anybody", and that they specialized in lending to people with tarnished credit. When people called to apply for the loans, they were told that they were approved, and all they needed to do in order to obtain the cash was to remit a check or money order for ninety days worth of payments in advance. These borrowers, many of whom intended to spend the money to reduce their debt, signed up for these loans by trusting the lenders.

Scams and fraud of this type appears to be increasing as fast as the bills the customers want to reduce with them. Those customers who replied to advertisements by criminals never received the cash and never were contacted by the "lender" again. These lenders weren't questionable companies that were advertising on telephone poles; these were organizations that actually had advertisements in the Phone book, a type of advertising that Americans generally trust.
 

Here are a couple of tips you should heed when looking for a loan, especially one that is not backed up with collateral:

• Avoid companies that tell you that you cannot be refused. There is no such thing as a "certain" loan. Be skeptical if the lender asks you to pay a fee to apply for the financing, as applying should cost nothing. No professional financial institution is going to guarantee that you will qualify before they actually analyze your credit record or score.
• Wiring money is a risky way to transfer money and a sure sign of trouble. Paying fees by wire transfer, such as using Western Union, can't be traced if something goes wrong. Many unscrupulous lenders will require that you submit money to them by wire transfer.
• Watch out for firms that want you to pay a fee in order to receive the money. A loan is a loan; you should not have to pay to receive the sum. Paying back on a set schedule is reasonable, but repaying before you have received the money is not.
• Getting a loan from a recommended source is much safer than just randomly taking a telephone number from an advertisement. If you must borrow money, try to use a lender that can be honestly endorsed by a friend or relative.

Before doing business with a lender, do a little research, as it may save you a lot of heartache. It is unfortunate that there are a lot of consumers out there that are eager to make off with your money. Stealing your money that is precisely what these people want to do, and you need to do your best to avoid becoming a victim. After all, no one is going to look out for you. You have to look out for yourself.