On behalf of Law Office of Paul Mankin posted in Consumer Protection on Friday, September 16, 2016.

The vultures appear when an animal begins to struggle. It's the same in lending and that's what makes debt consolidation offers so dangerous. There are trusted and wholly reliable sources that consolidate debt but there are many predatory companies who sell their service as consolidation when it's truly debt management.

Consolidation versus management

Loan consolidation is the combining of multiple loans into a single new loan. Reputable companies who offer this include banks and credit unions.

Debt management is a service where a company negotiates with creditors to reduce your loans. They receive payment from you with the goal of using that money to pay the revised terms of the loan. The company collects your payments with intent to pay a new sum to your creditor when they reach an agreement. Instead of using your month payments toward your mounting debt, it goes into a pool until they have finished the deal, all while charging you a monthly service fee for their help. There is no guarantee your loan will be renegotiated successfully and, if it's not, you're back where you started except that you now owe the management company for their "services" and you haven't been paying down your debt in the meantime.

These predatory companies know when to swoop in for their prey, so here are so clues that you should hang up on a caller.

Common signs of consolidation scam

• Money is requested up front, often as a service fee
• The company uses a P.O. Box
• The company says you can only sue in specific states - and they are not where you live
• You're asked for a bank account number
• The sales person uses aggressive language or tactics
• The company uses a robocall