When carrying around so much debt feels like drudgery, it’s tempting to accept the first offer that comes along guaranteeing to erase your balances for a fraction of what you owe. But be careful: some bad actors out there will have you in even worse shape. Here’s what to look for when spotting credit card relief scams.
The Situation
Reputable companies such as Freedom Debt Relief can certainly help give you a fresh start. Unscrupulous agencies, however, will make undue promises and often even charge you before a single debt is settled. Not only is this bad business – it’s illegal. Legit debt relief companies do charge fees but can only bill you when they get results.
Some agencies will string you along with false pledges, while others may take your money and skedaddle. Pretty terrible, eh? Well, these people know you’re desperate to climb out of your hole. That’s all the more reason for you to take a step back until you know what you’re dealing with.
Warning Signs
There are some red flags that the company you’re dealing with is not looking out for your best interests. Those include:
- The agency asks for money up front before any debts are settled. This is illegal.
- The company “guarantees” it can clear your debt or shrink it by a specific amount in a certain period. Creditors likely will settle since your next step could be bankruptcy. If you file for that, your creditors get nothing. Still, they are not obligated to work with you.
- The agency lacks transparency. To wit, it won’t give you info about what it does unless you give it data such as credit card account numbers and balances.
What You Should Do to Avoid Being Scammed
- Check out the company you’re interested in. Go online to see if there have been bad reviews. Contact your state’s attorney general and consumer protection agency to see if there have been complaints.
- Understand that debt relief companies must explain all fees, give you an idea of how long it will take to settle each balance, and point out the risks of stopping payments to creditors, which most agencies ask you to do.
- Credit card relief scams often include claims of “a new government program” or, say, a new law that will forgive your liabilities.
What You Should Not Do to Avoid Being Scammed
- Do not give a dime to a debt relief company in advance, even if the requested amount is called a “donation” or a “voluntary” fee.
- Don’t buy into guarantees. No agency can promise that it can lower your debt by a specific amount or block collection calls or lawsuits.
- Don’t believe that an agency can delete unfavorable info from your credit file. If you have negative but accurate info on your credit report, that stays there for at least seven years.
More Resources
You can go online to report debt relief scams to the Federal Trade Commission. You can also get the FTC publication “Coping With Debt, ” which provides advice on debt settlement and other forms of debt relief.
Now you know a bit more about spotting credit card relief scams. Debt relief is a strategy that has helped scores of people regain their financial footing. Just make sure you choose a company that has been around, and that has a proved track record. Do your due diligence, and chances are you will come out on top. Get going on this today.