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Bankruptcy May Be Your Option

Student loans are student loans, right? Scams prey on confusion

Tuition for higher education, whether at a private college, public university or graduate school, has exponentially increased over the past few decades. While tuition continues to rise, entry-level job opportunities and yearly salaries took a nosedive during the recession.

Under these circumstances, more and more students have found themselves under the burden of massive student loan debt that they simply cannot afford to pay. It is unfamiliar territory for many of these young individuals, and the debt relief industry knows it. Sadly, there are some individuals that are taking advantage of the desperation and inexperience of these recent grads.

The Federal Trade Commission and the U.S. Department of Education want to remind those with this type of debt that these devious consolidation companies are out there.

Some of these scams are downright illegal. In other cases, the actions of a debt consolidation firm may not necessarily be illegal, but they’re still finding a way to profit from the situation.

For instance, some students have both federal and private loans. There is a difference between the two, and that difference matters. Consolidating the two together with an outside company could mean a higher interest rate than necessary.

Our readers may be wondering at this point how they can ever protect themselves from a scam. When it comes to these unscrupulous debt relief practices, there are a few common red flags to watch out for. Just ask yourself a couple of questions.

Who made first contact? If they called you, it’s a red flag. Don’t give out any personal information or click on email links. Even if it has a seal that looks official, remember that the Education Department doesn’t solicit, offer incentives or even advertise.

Do you feel like you are on the receiving end of a sales pitch? Watch out. The FTC warned that individuals or companies that pressure you into making a decision could be a scam.

Are discounts a big selling point? Take this opportunity to read the fine print. A rate discount may come with some serious strings attached, like an increase in the rate if you are late on making just one payment.

Those that find themselves under seemingly insurmountable debt should consult a bankruptcy attorney that can help them understand the benefits and the consequences of any debt relief option. And the best part? A Tulsa bankruptcy attorney is under a legal duty to act in an ethical manner and with the best interests of their client in mind.

Source: Main St, “Watch out for Student Loan Debt Consolidation Scams,” Naomi Mannino, Feb. 19, 2014

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