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Debt Consolidation Loan Scams and How To Avoid Them
April 19,
2006
Many people who
badly need money make the mistake of doing business with companies
that steal money from them rather than lend it. These scams are
usually directed at people who already have bad credit. More people
are in financial trouble than ever before, and many criminals are
taking advantage of this situation. Those who are filing for credit
counseling or bankruptcy are at a high risk for these types of scams.
Here I will show you common scams and what you can do to avoid them.
Money Up Front
Scams
If you are in a
situation where you need to file bankruptcy or seek credit counseling,
your life is likely already hard enough as it is. The last thing you
want is some con artist taking more of your money. Unfortunately, a
huge market exists for these types of scams. The most common trick
used by debt consolidation services is to make an offer to loan a
client money despite their credit history. They will ask that the
client pays three months in advance before they are able to loan them
money. The company then takes the payments and refuses to loan the
client money, stealing from them.
Many of the
customers never hear from the company again. Many of these companies
make themselves appear legitimate by purchasing advertising space in
the local phone book, a place that most people trust to find their
information. As more people suffer from debt, these scams will
continue to increase.
You should
avoid any lender which asks you to pay money up front for the loan.
This is generally the first sign that a service is likely a scam.
There is no reason you should have to pay a fee up front. Any lenders
which ask you to pay before you receive the money are likely con
artists. You should only have to pay money back after you've been
given money, not before. Many of these services will also try to get
you to send out a wire transfer.
Wire transfer
services like Western Union are not secure, and there is no recourse
available if something goes wrong. The transactions can't be traced,
and you should avoid any services which ask you to wire money to them.
If you feel the need to borrow money, you should use a service which
is recommended by a friend or member of your family. This is much
better than calling a random service which you've never heard of.
A Word On The
Side Of Caution
It is important
to be cautious when looking for loans, especially those which are
unsecured. The first thing you should realize is that there is no such
thing as a loan which is guaranteed. You should be wary of lenders who
promise that you will be approved without bothering to check your
credit history.
It is an
unfortunate fact of life that many people make a career out of
stealing money from others. Much of this fraud is perpetrated by
groups which are highly organized. Getting scammed in a situation
where you are already on the verge of bankruptcy can be enough to push
anyone over the edge. People tend to make the most mistakes when they
are desperate. It is important to analyze the situation and study the
lender carefully. Anytime you are asked to pay money up front this
typically means that it is a fraud, and will not end well if you fall
for it.
Source:
Dailyindia.com
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