Consumers looking to consolidate debt should beware of unscrupulous lenders

If debt consolidation options look too good to be true, they probably are, according to a recent report from Consumer Affairs.

The consumer advocacy group says that there are several tell-tale signs that a given organization’s offer of debt consolidation could be a rip-off. Any offer that promises to settle debt for much less than the amount owed is a dead giveaway, Consumer Affairs says.

The author of the report, Mark Huffman, also says that "scammers like to get paid in advance. In fact, they insist on it. They want to have received all your money before you figure out you’ve been scammed. Many states have recently passed laws prohibiting advance fees for debt settlement services. Whether your state has or not, it’s never a good idea to pay in full in advance."

Criminals of various stripes have been quick to take advantage of the desperate financial straits that Americans have occasionally found themselves in during the economic slowdown, but experts say that legitimate debt consolidation options are available and can be a big help to consumers.