Watch Out for Debt Consolidation Fraud

debtGetting out of debt is an important goal for many people. Debt consolidation on can help individuals by simplifying their payments to avoid missing payments and possibly offering lower interest rates than they are currently paying. Unfortunately, there are companies that target those with bad credit or high debt ratios, hoping to take advantage of their situation.

Beware of any offers that sound too good to be true. Untrustworthy companies may send offers claiming to cut debt in half or get you out of debt fast. Malicious companies may offer loans to pay off debt with rates that inflate over time, or go up significantly if even one payment is a single day late. They may also charge hidden administration fees that simply add to the existing debt.

Look carefully at all fees. Although some companies may not necessarily be scamming you, you may not be getting the help you need if fees are simply adding to your debt. Companies may charge monthly fees, sign-up fees, a flat portion of the total debt or a portion of the amount you save in debt consolidation. Some companies may even try to pressure you into paying “voluntary fees.”

Just like most other things in life, there is usually no quick fix for debt. Debt consolidation is not a magic solution. Look for a company that offers a gradual reduction of debt without charging high fees. Even with help, getting out of debt requires patience and discipline. A responsible company is willing to help you create a realistic budget that will gradually lower your debt, instead of claiming debt will instantly disappear.

If you’re ready to consolidate your debt through responsible borrowing, contact Horizon Bank and talk with an advisor about a debt consolidation loan.

Our goal is to provide our customers with sensible financial advice so you can do the best with your money.