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A Guide to Maryland Debt Consolidation

A Guide to Maryland Debt Consolidation

How Federal Laws Protect Consumers

In a struggling economy, it is easy for consumers to get in over their head financially. As the amount of debt begins to mount, the calls from collection agencies begin, further adding to their problems. The Fair Debt Collection Practices Act (FDCPA) was enacted by the United States Congress to prevent abusive conduct by collection agencies. This federal law has guidelines that agencies must follow when attempting to collect a legitimate debt. Third-party collection agencies are prohibited from engaging in any of the following practices:

  • They cannot threaten people by saying they will be put in jail for not paying their bills
  • Contacting a third party that does not owe money to the creditor
  • Making false statements that they represent a government official or lawyer
  • Taking action to garnish wages or bank accounts
  • Threatening to repossess your property
  • Making racial slurs or using obscene language
  • Repeated phone calls before 8 am or after 9 pm

Debt collectors that violate the law can be sued in court within one year from the date of violation. Consumers can recover damages, attorney’s fees and court costs.

The Benefits of Debt Consolidation

Maryland debt consolidation programs can help debtors by combining their debts into one loan. Consumers should try to obtain a loan with a low interest rate. There are a few ways to consolidate the bills, which might include:

  • Consolidation Program—This option allows you to enroll in a program with a company that will analyze your current financial situation. The consolidator can negotiate with your creditors to decrease the interest rate. They will help formulate a plan protecting you from being hounded by collection agencies.
  • Loan Consolidation—This allows consumers to pay off the balance on their existing accounts. A consolidation loan is easier to manage because the interest rate and monthly payments are lower. In addition, it will eliminate late payment fees and interest charges from accruing.

People who wish to avoid filing for bankruptcy may view debt consolidation as an alternative to the financial problems.

Choosing the Right Program

It is important to find a reputable company to do business with and here are some key tips:

  • Read any on-line reviews posted by actual customers
  • Find out how they are rated by the Better Business Bureau
  • Make sure if they are a licensed and accredited company

You may want to ask friends or family if they can recommend a reputable program that they used in the past. Find out if there are any complaints about the company by visiting the Maryland State Attorney General’s website. They provide email addresses so that consumers can send in questions.

Avoiding On-Line Scams

Be wary of companies that make false claims and request fees up front. Some scams send a letter to the person promising a loan in exchange for a fee. To avoid becoming a victim of fraud, follow these important steps:

  • Never give out your Social Security number or account numbers before you apply.
  • Don’t work with a company that recommends a solution before they have even reviewed your finances.
  • Avoid companies who claim that they can get government money to pay your bills.
  • Be wary of services that charge large up front or high monthly fees
  • Never do business with a company that pressures you into applying for their services without time to discuss it with family members.

Services that offer to fix your credit history for free are also suspect. Make sure they are a licensed non-profit organization by researching them through services, such as Charity Navigator.

Photo courtesy of SqueakyMarmot.

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