Debt Consolidation – Are Online Sources Safe?

Posted by: Sandy Lyons on 12/09/2011

You probably know that the wonderful world of the Internet has made it possible to enroll in a debt consolidation repayment plan without a single face-to-face interaction.  Online evaluation forms and phone calls let you do everything from the comfort of your own home.  Internet scams are becoming more and more common every day, so are these online sources safe?  Certainly some are better than others but what should you look for?

First, watch out for wildly positive claims such as, “we’ll get you totally debt free in 3 or 4 months or less.” 

Second, watch out for evaluation or assessment fees payable before you provide them with a single piece of information about your situation.  What’s more, watch out for exorbitant initial fees or commissions before they reach any settlements with your creditors.

Third, pay careful attention to the timing and frequency and the method of contacting your creditors.  Most Canadians would like to enroll in a plan and then forget about everything except the required monthly payment.  Contact with creditors is left up to the third party provider they’ve signed up with.  But if something goes wrong, the creditors will come after you, not the third party provider.  And nothing prevents them from using legal collection methods if they so desire.

Fourth, check the Better Business Bureau for complaints against the company.  While this might help, the hard truth is there are financial advisors out there who strongly recommend avoiding online debt solution providers completely.  Their advice is to stick with local providers with whom you can consult face-to-face. 

There’s more.  With the explosion in the need for debt solutions, in recent years the professional marketplace has become overcrowded with providers.  Experts tell us to stick with local companies who have been in business for an extended period of time and whose references and reputations you can check, avoiding the “newest kids on the block”.