In case you are a person who is having trouble making the repayments for the debts that you owe, then you should be finding this article very useful. There are a lot of people who have taken loans for a variety of different purposes. Some people take loans for their business ventures; some take for their personal expenses. For a lot of these people, there will be a huge number of debt relief services which will be offering ways and methods for coming out of the debts they owe with specific plans which will be helping them in settling their debts. Some companies might even charge some fees for offering this service.
However, there are a number of fraudulent companies which will also be cheating the consumers of the money that is owed and will not even solve the debt problems that they have. Thankfully, there are some debt consolidation laws which protect people’s rights. In this article, you will be learning about such laws and their utility.
Why should you be taking a debt consolidation loan?
Debt consolidation loans are one of the most effective ways for you to be coming out of the debts that you owe. Debt consolidation is a legal way of getting debt relief services. It will involve you to consolidate various loans which have into one single loan which you would have to pay off as a single loan to the single lender. Generally, there will be a debt management institution or company which will come and give you this loan. It will be their responsibility to pay off the loan to the various creditors to whom your money.
Debt consolidation loans are a popular method of getting a debt relief service as it offers two primary benefits:
- Firstly, they will be helping you in reducing the rate of interest that you are required to pay, as a result of this you will be saving up on a lot of money. For example, in case you were required to pay to your various creditors an interest rate of 10 percent for all the loans you owed on an average. Then after the consolidation, the interest rate will be quite reduced to perhaps 5 percent. Thus, this will be helping you to save up on a lot of money after a prolonged period of time.
- The second important benefit that you get from a debt consolidation loan is the fact that with a debt consolidation loan you will be able to extend the tenure for the repayment of the loan to a long period which will allow you to repay your debts with a lot of comfort and calmness. As a result of this, you will be able to take things slowly. So, if earlier you were obligated to repay the loans within four years after you take a debt consolidation loan, you will be able to extend the duration to around six years for instance. Added to this, the rate of interest shall also be lower. So you will have a good chance of loan repayment with less pressure.
How are debt consolidation agencies still able to cheat people?
Although it is clear that a debt consolidation loan has a lot of advantages, there are plenty of people who are quite afraid to be using such a loan service. Perhaps the most important reason for this is that you can find plenty of fraudulent companies which engage in doing scams and will not be adhering to the facts that they will be stating in their advertisements. For example, there were some incidents when the debt consolidation firms would be able to take their customers on a ride, by asking them to pay up some fees which they had not mentioned about earlier. There are also some agencies which will be taking money from the customer but will not be repaying the original debtors at all. This will be leaving a lot of trust deficit because the customer will get embroiled in a much larger debt and a very bad financial mess. As a result of this, there are some debt consolidation laws which have been enacted in order to give people respite and help them in protecting themselves from being cheated by the debt consolidation loan giving company.
Examples of some laws which were designed for protecting consumer rights
Some of the provisions made under these laws will be including the following:
- The debt consolidation loan giving company will be required to have a firm which has been authorized and is certified by the specific government institutions in order to allow them to undertake some debt relief giving financial transactions.
- The debt consolidation agencies will be required to be providing you in writing what the details of the deal are that has been done by them and you, this shall specify what the specific costs will be which you should be paying them, what the correct rate of interest will be and the correct time duration within which you ought to be making the repayment.
- The company should also be specifying what the steps should be which they ought to be taking in the event that you fail in making the repayments at the right time.
- It should also be seen that the company sends you specific written letters where they shall be informing you about the payments which are due when you miss the repayments.
- The debt consolidation companies shall not be calling and harassing you if you fail to make repayment under any circumstance.
- The company shall also be required to give you a receipt showing that they have settled and paid the money that you had owed to all the individual creditors.
You can learn more about debt consolidation laws at Libertylending.
Debt consolidation laws will be helping the customer to protect his rights in securing his financial well-being. Hopefully, the information mentioned in this article will have helped you.