Financial scams and debt consolidation schemes

The number of Americans who have trouble making ends meet seems to grow every day; we build more and more debt and have a harder time paying it back. Many debtors try to eliminate debt by filing for bankruptcy, signing up for financial counseling, or by getting a debt consolidation loan, but the crisis just appears to be getting worse.

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There have been many cases in the news lately of debtors who have been ripped off by financial institutions that promised to loan money to individuals with poor credit. Adding to the problem of rising debt is the rising number of "lenders" who are taking advantage of consumers with money struggles and poor credit. These individuals, many of whom wanted to spend the cash to reduce their debt, applied for these loans in good faith. When customers called to apply for the loans, they were informed that they were approved, and all they needed to do so that they might obtain the funds was to submit a check or money order for three months worth of payments in advance. The companies claimed that they would lend money to "anyone", and that their specialty was lending to individuals with damaged credit.

These financial institutions weren't shady operations that were advertising on phone poles; these were companies that had advertisements in the Telephone book, a kind of advertising that Americans generally trust. Those consumers who responded to advertisements by criminals never received the cash and never were contacted by the "lender" again. Financial scams and fraud of this kind seems to be growing as quickly as the debts the people want to use them for.
 

Below are some tips you should think about when applying for a loan, especially one that is unsecured:

• Borrowing from a trusted source is safer than just randomly grabbing a phone number from a Yellow Pages ad. If you are forced to obtain funds, try to make use of a financial institution that can be honestly recommended by someone you know.
• Watch out for financial institutions that tell you that you will not be turned down. No responsible lender is going to guarantee that you will qualify before they actually evaluate your credit history or FICO score. There is no "guaranteed" loan. Be suspicious if the financial institution asks you to pay a fee to apply for the financing, as applying should be free.
• Sending in fees by wire service, such as using Western Union, can't be traced if something goes wrong. Wiring money is a poor way to transfer money and an absolute sign that something will go wrong. Many unscrupulous lenders will require that you send cash to them by wire transfer.
• A loan is an offering of money; you shouldn't have to pay in order to receive the sum. Paying off on a fixed schedule is fair, but paying back before you have received the cash is not. Avoid lenders that want you to pay a fee so that you might obtain the funds.

Before engaging in business with a company, do a little research, as it may save you plenty of headaches. It is unfortunate that there are a lot of consumers out there that want to steal your cash. Stealing your money that is precisely what these people want to do, and you need to make the effort to avoid becoming a victim.