Consolidating Your Debts: Avoiding Dangerous Debt-Consolidation Possibilities

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When your debts are creating a lot of stress, your judgment may get clouded. You may start grasping at straws and do something really stupid that you would never do if you were thinking clearly " like fall for one of the many debt-consolidation offers out there that are outrageously expensive, and maybe even scams. Here are some of the worst offenders to avoid:

• Debt-counseling firms that promise to lend you money to help pay off your debts: If you get a loan from one of these outfits, it will not only have a high interest rate, but you may have to secure the loan with your home. Watch out!
• Finance company loans: These companies often use advertising to make their debt consolidation loans sound like the answer to your prayers. They are not. Finance company loans typically have high rates of interest and exorbitant fees. As if that's not bad enough, working with a finance company will further damage your credit history.
• Lenders who promise you a substantial loan (probably more than you can afford to repay), no questions asked, in exchange for your paying them a substantial upfront fee: No reputable lender will make such a promise. Not only will these disreputable lenders charge you a high percentage rate on the borrowed money, but they will also put a lien on your home or on another asset you don't want to lose.
• Companies that promise to negotiate a debt consolidation loan for you and to use the proceeds to pay off your creditors: In turn, they tell you to begin sending them money each month to repay the loan. The problem with many of these companies is that they never get you a loan or pay off your creditors. You send the company money every month while your credit history is being damaged even more, and you're being charged interest and late fees on your unpaid debts.

This article was authored by Ted Benna, Stephen R. Bucci, James P. Caher, John M. Caher, N. Brian Caverly, Peter Economy, Jack Hungelmann, John E. Lucas, Sarah Glendon Lyons, Margaret A. Munro, Brenda Watson Newmann, Mary Reed, Jordan S. Simon, Kathleen Sindell, Deborah Taylor-Hough, John Ventura.