Free Information: Debt Consolidation & Settlement Programs

Since it’s just too dang cold to do anything other than sit in bed wrapped in my fuzzy blanket I’m taking advantage of this time to surf the web.  I came across a website I thought I would share about debt settlement programs. Nope, I'm not telling you to rush out and sign up for one if you're having debt problems. Actually I'm going the opposite. This website explains why you should beware of programs that promise debt consolidation or settlements.

Take it from someone who’s been there.  A lot of debt consolidation programs are scams.  Hubby and I found ourselves in debt years ago.  Our debt consisted of a few credit cards and student loans.  As we were having trouble keeping up with the payments we signed up for debt consolidation.  The program promised to consolidate our payments into one that we could afford, negotiate lower monthly payments, drop our interest rates to 5% across the board, cancel out the late fees we had been charged, stop the collections calls, and get our due dates changed to the same date for all payments each month 2 weeks after our payment was due to the debt consolidation company.

Everything seemed to be going really well for the first few months.  A letter came through the mail from one of my credit cards with a 13.99% APR informing me there would be a change in my interest rate.  To my surprise instead of the 5% I was promised the letter said my APR was increasing to 29.99%!  Then I started getting calls from one of my federal student loans.  I was informed I was 5 months behind on my payments and in default (disqualifying me from future student loans).  I explained that everything was handled by our debt consolidation company.  Student loan company not been contacted by the debt consolidation company nor had they received a payment in 5 months!

When I inquired about it with the consolidation company I was told payments had been made, was faxed “proof” that the payments were sent each month to an account that was labeled as the student loan company, and was told the situation would be handled.  I thought it all seemed rather fishy, so I decided I wanted to cancel our consolidation and handle things on our own again.  I called the student loan company with the information that had been faxed to me, and they said the account number the payments were sent to was in no way connected to them!  That sealed the deal for me right there.  I sent a written letter (per the requirements in our agreement) to cancel, and received confirmation of the request.

Years later I found myself with a bad mark on my credit claiming I had a loan in default from a company with the same name as the debt consolidation company claiming I was in collections for over $2000 more than all of our debt combined!  This seriously hurt my credit score, and it took months and months of dealing with the credit reporting services to get the situation rectified!

The bottom line is take it from me.  I’ve been there.  I’ve been burned by a debt consolidation scam, and I urge you to do your research before ever committing to one of this programs.  They do nothing but scam you out of your hard earned money while harming your credit even more!