You could be already behind on your loan payments, or you may be overwhelmed with debt and you’re likely to default. In either case, you might have considered the option of consolidating the dues to pay them off fast.

No doubt debt consolidation is a popular way to wipe out debts. But before you choose to go for it, we feel it’s our duty to warn you about the possible fraudulent activities that are being practiced in this industry.

Types of debt consolidation scams

It’s really easy to scam one who is in dire need of help to get out of his financial problems. Amongst the various forms of debt consolidation scams, advanced fee loan scam is one in which a lender promises an immediate loan to the consumer against upfront fee payment with no real intention of lending the money actually.

Even debt consolidation companies aren’t far behind in scamming the consumers. The desperation of the debtor further makes it easier for the consolidators to convince that they can reduce or eliminate his debts. They would sound extremely cordial when you contact them for the first time. However, the situation changes soon after you pay their upfront fees. Further, if your credit already stinks then there is no company that can make it look better over night. So beware of companies that promise an impeccable credit report.

How can you avoid being scammed?

Knowledge is the key to avoid falling a pray to these scammers. While choosing a consolidation firm you must remember the following things.

• Shop around

Since you’d be paying for this service, you must look out for the best deal. Don’t think that you’re required to take the first deal available. The consolidators may try to make you feel that only they can get you out of the mess but that might not be true always. So, compare their charges and also check with hidden expenses.

• Ask questions

Right, ask them as many questions that come to your mind, don’t hesitate, and the representative should be knowledgeable enough to answer all your queries. If you don’t feel satisfied with an answer, ask back.

• Check the company’s background

You should know how long they are into the business and what’s their success rate. Check with sites like BBB; and also with the website of State Attorney General and FTC.

• Keeping information private

Do not share personal information, like your bank account details, at their initial contact. Also, never authorize a check over phone.

Unfortunately, when you’re drowning you may hold on to any straw available, and that is the reason why this industry has flourished so much. It may not always be your poor money management skill that is to be blamed, but at times situations throw us into such position. Adding to your woes are the economic slowdown, high end life style, easy accessibility to credit and other such factors. But it’s not hard to find a reliable consolidating company if we just invest little more time in finding the right one.