Nightmare Debt Consolidation Services

Nightmare Debt Consolidation Services
By: Trisha Dingillo

Being in the mortgage industry, I've come across so many people who've gone through some extremely hellish situations. They've been lied to about the financial services they chose, they made poor financial choices or ran into a bad debt consolidation programs and companies that assured they could help.

The worst was a family of 4 who had fallen on hard times. Both parents had been laid off and were becoming financially strapped, very quickly. They had some debt and sought counsel from a debt consolidation company to combine their bills into one monthly payment. A few months later they were getting calls from creditors saying they were being sued for having fallen so far behind. The debt consolidation service they hired did not pay their bills at all and now they were in hot water. They had a lot of equity in the home but couldn't get to it because their credit scores had dropped so low that they could not qualify for a refinance loan or an equity line. There really was no good option out of the horrendous situation the consolidation company had put them in. Had they talked with their creditors themselves, they may have been able to work out a repayment plan. Also, before their credit dropped, they may have refinanced the home at a decent rate to pull cash out to pay their bills, and also to put extra in the bank as a buffer to get them through hard times.

Another was a family with four small children, who refinanced their home to get cash out to pay off debt . Their rate increased by 1.5% over the original loan, and with the cash out their payments increased by $800/month. They didn't KNOW the payments would be this high, and when it was time to start paying the mortgage, the payment was almost their entire paycheck. They didn't know what to do. Foreclosure seemed imminent. This was a bad loan. They should not have been qualified for a mortgage with this payment.. now they were looking at losing their home. They didn't read the paperwork. They also didn't know that they could have walked away from this loan up to 3 days after it closed (recission period / right to rescind)

I could go on forever here, but there is one very short point to these stories. Being naive to good and bad ways to handle financial mishaps or reaching financial goals can really put your life in the grip of a vice. Make sure that you're working with a good company. Look at a company's history, read the fine print in your contracts, and follow up with services that you hire.
Do some searching online to find the right questions and speak at length with the representative about how your situation will be handled. Whether its debt consolidation, mortgage companies or any other, its important to know the right questions to ask, and to make sure that the company is doing what they are being paid to do.