Top 3 Warning Signs Of Debt Consolidation Scams

Many people these days deal with debt. If you’re one of them, you may have heard of the option to consolidate credit card debt. In many cases, this can be a smart idea. However, while there are legitimate ways to consolidate your debt, you must watch out for debt consolidation scams. We’ll discuss the Top 3 warning signs for these financial scams in this article.

What is Debt Consolidation?

Debt consolidation happens when you take out a single loan from a lending entity and use the money from it to pay off various other financial obligations, such as credit card debt. This makes sense when you can find a lending entity that will give you a better interest rate than you’re getting with your current creditors, thus saving you money on interest.

---

Scam Detectors Most Trusted Websites in Online Security

1. Guard.io (100): Surf the web safely. Clean up your browser, remove maliscious extensions and check for privacy violations.
2. Incogni.com (100): Delete your personal data from the internet and protect against scams and identity theft.
3. ExpressVPN (100) Stay secure and anonymous online - Best VPN Out There

---

You might also do this to simplify the debt repayment system. Having one company to pay back at a set monthly rate is often easier than having multiple entities to which you owe money.

Now, let’s talk about some of those scam warning signs we mentioned.

1. Upfront Fees

Charging an upfront fee to consolidate your debt is illegal, but that does not stop some companies from trying to do it. If a business tells you it will deal with your creditors after you pay them, that’s more than likely a scam.

The FTC regulates companies that try to do things like this, but that doesn’t mean some of them won’t still try to get away with it. Companies like this exist, and they’re counting on you not knowing the law.

2. Robocalls

If the company makes initial contact with you through a robocall, you should regard that as highly suspect. Debt settlement organizations that are legitimate will have live operators available to speak to you.

The robocall might also try to get you to reveal personal information about yourself and your finances. Don’t fall for it. Instead, contact the company through a legitimate website and vet them thoroughly before moving forward. Seeing if entities like the Better Business Bureau approve them can help you establish their legitimacy.

3. They Tell You to Stop Contacting Your Creditors

If the debt consolidation company you chose tells you to stop contacting your original creditors, that’s suspicious. It’s important to continue communicating with your creditors to see if you’re on track with your debt reduction plan.

Retain communication with your creditors while the consolidation is going on. Don’t ever let the debt consolidation company you chose bully you into not doing so.

Use a Legit Debt Consolidation Company

Legitimate debt consolidation companies are out there; you can find them if you watch out for scams. Debt consolidation entities contacting you via a robocall and asking for your personal information are probably fraudulent. Make sure to talk to a live operator and cross-reference the company’s legitimacy before revealing anything about yourself and your finances.

Continue communication with your creditors during the debt consolidation process. If the company you’ve chosen to help you consolidate tells you to cease communicating with them, that’s a major red flag.

Finally, don’t pay a company an upfront fee to handle your debt consolidation. The FTC has rules forbidding that, and any legit debt consolidation company will abide by them.

If you watch out for these behaviors, you should be okay. Researching a debt consolidation company carefully before signing on with them will always be your best move.

How To See If a Debt Consolidation Website Is Legitimate

We have good news. You can now verify every company with our website validator tool. If you feel a debt consolidation website (or any other type, for that matter) might be suspicious, feel free to verify it using our unique Scam Detector website validator below:

How To Report a Debt Consolidation Scammer

Let your family and friends know about these 3 warning signs of debt consolidation scams by sharing this article on your social media. Alternatively, you can officially report financial debt scammers and any other suspicious activity to the FTC (Federal Trade Commission) using the link below:

Report To The FTC Here

How To Protect Yourself More

If you want to be the first to find out the newest and prevalent scams on a regular basis, feel free to subscribe to our Scam Detector newsletter here. You'll receive periodic emails – we promise not to spam. Just quality.

Meanwhile, educate yourself with some other financial fraud-related articles right under this paragraph, so that you know how to stay safe online. Last but not least, feel free to use the comments section below to expose other financial crooks.

10 Signs of Identity Theft

Credit Card Settlement Scam