Debt Relief Scams

What to Look for and How to Protect Yourself

debt relief scams

Debt relief scams are ever increasing, as more and more people try to dig out from a mountain of debt by seeking help from debt management specialists.

While there are many excellent, capable companies you can hire; sadly, there are also some unscrupulous individuals who set up business fronts that appear to be viable companies. Then, they rob the people who come seeking financial help, making debt issues even worse for their victims.

So how do you know which companies are genuine, and which are most likely frauds? Here are some tips and claims that will help you spot the debt relief scams from the capable, trustworthy companies.

"Instant Debt Relief... Guaranteed!"

As with any purchase or service you are considering, if it sounds too good to be true, it probably is. Claims such as "Debt Reduced to 50% – Guaranteed!" or "Instant Debt Relief!" or "Erase All Bad Credit!" are all examples of extravagant promises. And the loftier the promise, the more skeptical you should be.

No one can "guarantee" a certain percentage of your loan will be eliminated. Debt negotiation is a thoughtful, planned process with your creditors, and ultimately hinges on your creditors' approval of the terms put forth by the debt management company.

The word "instant" cannot be applied to debt relief. Debt relief takes time, just as debt build-up likely did. Unfortunately, there is no such thing as "instant debt relief." Like anything else meaningful, it takes hard work, commitment and time to accomplish.

No one has the authority or the means to "erase" anything from your credit report, if what appears is accurate. Errors that show up on your credit report can certainly be removed by following established procedures provided by the reporting agency. But, correct information can't be wiped off your credit history.

"Just give us your bank account number."

Stay away from companies that ask for your personal information upfront, such as bank account numbers or your social security number. Other red flags of debt relief scams are not offering to meet in-person, not providing a written agreement, and/or requiring a hefty upfront payment.

An in-person meeting should take place before you sign anything, share personal information, or hand over money. During this one-on-one session, the company representative should review the firm's approach to debt management, as well as the range of services available to you.

He or she should outline fees and related costs for services, as well as provide you with a a copy of the company's agreement to take home and review. The agreement should spell out your and the debt management company's responsibilities, timelines, as well as the costs you discussed.

This initial meeting should always be provided without obligation and is pivotal to helping you decide if you want to hire the company to help you.

If you don't initiate the contact with a company and you are solicited for business, back away.

Don't do business over the phone or internet without an in-person meeting and signed agreement. You need to know who you are dealing with and exactly what services you will receive at what cost.

"And yeah, we are a Federal Company."

Few viable companies use names suggesting that the debt relief is sponsored by a government agency. Names starting with "federal" or "national" do not mean they are government affiliated.

You should be aware that there is no government-sponsored grant that provides financial assistance to relieve credit card debt.

Also, the use of the phrase "non-profit" does not necessarily mean that services are free or genuine.

Finally, to avoid debt relief scams, always check with watchdog agencies like Better Business Bureaus and consumer protection organizations to ensure the company you are considering is credible and no complaints have been filed. 

Related Information - Debt Relief Scams

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Debt Relief Grant - Fact or Fiction?

Free Resources for Help and Guidance

Fair Debt Collection Practices Act

Reporting Credit Fraud

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