Top 3 Red Flags Of Debt Consolidation Scams

March 3, 2023

Today, a lot of people have to deal with financial debt. If you fall into this category, you might have heard of consolidating credit card debt. This is a good concept a lot of the time. While it may be beneficial to consolidate your debt, you should be wary of any debt consolidation scams you may encounter. In this post, we’ll talk about the top three red flags that you’re being targeted by one of these financial frauds.

How does debt consolidation work?

Debt consolidation is the process of borrowing a single sum of money from a lender and using it to settle a number of other debts, including credit card debt. When you can discover a lender that will provide you with a better interest rate than what you are now receiving from your creditors, you can save money on interest.

You might also use this to make the repayment mechanism for your debts simpler. It is frequently simpler to pay back one firm at a predetermined monthly rate than it is to pay money to several different organisations.

Let’s speak about some of those red flags for scams that we already stated.

The upfront cost of debt consolidation

1. Upfront payment

Although it is forbidden, some businesses nonetheless attempt to consolidate debt by charging an upfront charge. If a company promises to take care of your creditors after you pay them, that’s probably a scam.

Although the FTC monitors businesses that attempt to act in this manner, some of them may still attempt to get away with it. These kinds of businesses exist, and they rely on your ignorance of the law to profit.

2. Robotic calls

You should be extremely wary if the business calls you on a robocall as their first point of contact. Legitimate debt settlement companies will provide you the chance to speak with actual operators.

Additionally, the robocall can attempt to trick you into disclosing private information about your money and identity. Avoid being duped. Instead, make contact with the business via a reliable website and perform a complete background check on them before proceeding. You can demonstrate their credibility by checking to see if groups like the Better Business Bureau endorse them.

3. They demand that you cease contacting your creditors.

If the debt consolidation firm you selected advises you to stop getting in touch with your initial creditors, it raises red flags. It’s crucial to keep in touch with your creditors to let them know how your debt reduction plan is doing.

Maintain contact with your creditors during the consolidation process. Never allow the firm you choose for debt consolidation to intimidate you into not taking action.

Employ a Trustworthy Debt Consolidation Company

You can locate legitimate debt consolidation organisations if you keep an eye out for cons. Robocalls from debt consolidation companies requesting your personal information are most likely bogus. Before disclosing any information about you or your finances, speak to a live operator and double-check the organization’s validity.

Throughout the debt consolidation process, keep in touch with your creditors. If the organisation you’ve chosen to assist you with consolidation advises you to stop engaging with them, that raises serious concerns.

Finally, avoid paying a business a charge up front to conduct your debt consolidation. Any legitimate debt consolidation company will follow by the FTC’s laws prohibiting such, which are in place.

You should be fine if you keep an eye out for these actions. Your best course of action is usually to thoroughly research a debt consolidation firm before working with them.

How to Determine Whether a Debt Consolidation Website Is Trustworthy

Good news has arrived. With our website validator tool, you can now confirm every organisation. Use the special Scam Detector website validator below to check any website you think might be questionable, including those that deal with debt consolidation:


Are you planning to purchase something online? Check the legitimacy of the website with our validator:

A Debt Consolidation Scammer’s Reporting Procedure

Share this post on social media to alert your family and friends to these 3 red flags of debt consolidation fraud. Alternatively, you can formally report financial debt con artists and any other questionable activities to the Federal Trade Commission (FTC) by clicking on the URL below:

Inform The FTC Here

How To Be More Protective

Please feel free to sign up for our Scam Detector email here if you want to be the first to learn about the most recent and common scams on a regular basis. We guarantee not to spam you, but you will occasionally receive emails. only excellence

To learn more about financial fraud and how to keep secure online, see some of the other articles listed immediately below this one. Please feel free to disclose further financial fraudsters in the comments section below, which follows.

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Sushil Kumar

I am Buzznc Staff and I am Senior Editor !

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