Spotting Debt Relief Scams
Many people in this troubled economy find themselves in debt. These burdens leave people feeling hopeless and with terrible anxiety, especially if they have experienced a layoff or unexpected medical emergency. As bills mount up that need to get paid or risk losing a home or vehicle, worry sets in on how they will get paid. Unfortunately, many companies prey on these fears and offer relief from all of the mounting debt many have incurred. They offer promises of negotiating with creditors and lower debt up to 60 percent or guarantee that the debt can be paid off within twelve to thirty six months but do not deliver the promises. Here are a few tips on how to spot debt relief scams.
First, and most important, if it sounds too good to be true it most likely is. Statistics show that up to 90 percent of all companies that promise to reduce debt of a small fraction or make promises that it will be paid off much quicker.
Another way to tell if a debt consolidation company is a fraud is if they ask for an upfront payment. You should be paying no more than $50 for an upfront payment and no more that $25 dollars as an upfront fee. Anything much more than that is an indication of a scam.
If a company, via email, mail or telephone has contacted you they are most likely not a legitimate company. A reputable company does not reach out to you to offer debt help. If you are considering a company that has approached you, check out the National Foundation for Credit Counseling. They can let you know if the credit counselor is legitimate and if not they can help put you in touch with one that is.
In addition, contact the Better Business Bureau. They can tell you if there have been complaints filled against the company and if they are a legitimate one. Many of the debt reduction companies claim to be nonprofit or be affiliated with the Better Business Bureau. By contacting the BBB you can find out the truth on those claims.
If you plan to use a credit counselor, shop around for one before handing over any money. A good counselor will spend at least 20 minutes discussing your situation to get a good idea of what it is. Anything less than that is not counseling.
While there are many reputable and legitimate credit-counseling companies, be sure to research them thoroughly and do your homework so that you do not fall victim to any sort of scam.
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The problem with most of the legitimate debt relief programs is that they simply don’t work for most people and even if they’re not a scam, they often charge excessive fees for doing what the consumer can down on his own.
Here’s a video of Suze Orman explaining why she considers them a scam and in the sense that they charge for something you can do for free, it is a scam.
It’s true they charge for something you could do yourself, but aren’t most services like that? You could take my own garbage to the dump every week if you wanted, but you probably pay a service to pick it up at your driveway. Similarly, you could manage a portfolio of hundreds of stocks yourself, but you probably don’t mind paying a mutual fund manager to do it for you. Just because somebody charges for a service you could do yourself doesn’t make it a scam or even a bad idea.
This is some of the best advice to avoid scams. Too bad many such companies prey on the desperation of folks to get out of debt as quickly as possible, and take advantage of those who already are soaking in debt, in the first place. But the consumer also needs to be aware of what’s going on around, and should do the homework before taking any more of his or her money out of the wallet.
Shan
Credit Card Debt Relief