by Steven Williams
1. Mortgage Modification as a major option. From my research, these companies are mostly ran by the same people that wrote the bad loans to the families. They promise to help families modify their mortgage enabling them to stay in their home, but all too often families find out it was a huge lie! In a recent ABC Evening News report, they stated that only about 300,000 mortgages have been modified, and that there were millions that have either been declined, or stalled, in the process. But what was even more alarming, was the interview with a mortgage company insider that stated that mortgage companies actually are lying to people when they applied for a modification, and they were actually moving their paperwork to the foreclosure department. Also, according to the FTC, this is the number one ranked scam in the market today.
2. Debt Negotiation as a major option. So called debt negotiation companies have been popping-up and making ridiculous claims that they can negotiate to lower your credit card debt by 50%. According to the FTC, this is the number two ranked scam in the market today. There have been numerous national news reports showing that these companies have actually made it worse for the families that signed up for their program, and that they only settle or negotiate with about .01% of their clients. About 95% of their clients don’t even make it through the program, and they end up getting sued by their creditors, making things worse.
3. Going Into More Debt to get out of debt. Incredibly there are financial counselors telling their clients to get 0% interest credit cards, and shift their balances. Also, to get a loan, and pay off some debts. The worse one is the home equity line of credit to pay your house off faster. All of these have been nightmares for people that fall for these scams. Usually the person that referred them is getting a commission of some sort from the company they refer them to.
4. Not Understanding What You Really Owe. If you don’t know exactly what you owe it’s going to be almost impossible to get out of debt. You’re not alone, most people don’t want to know what they owe, they just try to fix the problem a little bit at a time. But, that is a huge mistake, and it could cost thousands in unnecessary interest payments, and added years to making payments.
5. Making An Emotional Decision instead of an educated decision. The stress from your debt can make you very emotional. The debt collectors calling your home and work. The bills piling up, and you’re basically living paycheck to paycheck. When you are in that state of mind, you’ll most likely fall for the quick fix scams that are advertised on radio and TV.
6. Listening To Friends And Family when you are trying to get out of debt. Friends and family are well meaning, but they are not in the business of providing financial coaching advice. Most of the time they are worse off than you are, or they are hiding their own financial crisis.
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