By Helen Moore
Better Business Bureau
The flush of the holiday season is behind us and with any luck most of us have all our decorations stored until next year. Now many of us are faced with the reality that perhaps we spread a little too much Christmas joy.
If you are faced with a big pile of bills and not enough cash, your Better Business Bureau has some information to help you not make a bad situation worse.
It may be tempting to take out a short term loan, such as a payday or title loan. Be cautious, what many borrowers don’t realize is the high interest rates attached to these loans can trap you into what’s called a “debt cycle.” This debt cycle forces borrowers to repeatedly renew the loan and pay associated fees every two weeks until they can finally pay off the principal and get out of debt.
Another option many will consider is working with a debt consolidation company. There are reputable companies that offer this service. However, you will want to do your research before committing to a company.
Here are some red flags to watch for if you’re considering debt consolidation:
• The company promises unsecured debts can be paid off for pennies on the dollar,
• The company requires substantial monthly service fees and demands payment of a percentage of what it has supposedly saved you,
• The company tells you to stop making payments to or communicating with your creditors,
• The company claims creditors never sue people for not paying unsecured debts and claims that it can remove accurate negative information from your credit report.
There is no easy fix for debt problems. BBB recommends consumers check bbb.org for BBB Business Reviews, always read the entire contract before signing, and keep all your documentation in a safe place. Credit counseling centers can provide guidance for little or not cost. Visit www.nfcc.org for the location of the nearest center.
Make this a Happy New Year – be a wise consumer.
Helen Moore is regional director of the Better Business Bureau office in Waco