When people fall into debt, they often look for a quick fix to eliminate their unpaid balances. Debt relief companies offer a quick and painless way to get rid of the debt and get back on solid financial ground. Though these organizations may seem like the answer, not all are what they purport to be. Many people get taken for a ride and end up filing complaints with the FBI, National Consumer Debt Council, or Better Business Bureau.
To avoid enrolling in a fake debt relief program, be aware of the scams they run. The swindle is different depending on whether the individual engages in debt settlement, debt consolidation, or credit repair. Know what to look for before approaching a debt relief company in order to avoid becoming a victim.
- Debt Settlement- Settling debts requires that an agreement be reached regarding payoff amounts. Some debt relief programs do not provide clear details about how they approach the settlement process. They state that they will negotiate large savings on debts. Rather than doing this, they disguise the settlement amount as a service charge and the individual ends up paying close to or the same as the initial debt amount anyway.
- Debt Consolidation- If debt consolidation is the goal, beware of debt relief companies quoting a very low monthly payment. They may increase this payment once the consumer enrolls in the consolidation program. Also, be wary if a company requires a high upfront payment because this is likely not a legitimate expense.
- Credit Repair- Consumers who want to improve poor credit scores may also be faced with the scam of a large upfront fee for credit repair services. The consumer is often asked to provide bank account details at this stage. When a credit analysis session is later conducted, the analyst may convince the consumer to purchase additional services and may make a subsequent debit to the bank account. Once the upfront fee has been paid, these scammers make no effort to improve the credit score.
Leave a comment