Debt relief is a viable way to get back in the black, and there are many legit companies out there to help you through it. Unfortunately, there are also some shysters who are more than happy to separate you from your cash while doing little – if anything –for you. Thankfully, spotting credit card relief scams isn’t hard if you know what to look for.
When you’re up to your ears in debt, anything you come across that promises to bail you out can feel like a miracle. You may even get a call from someone who swears on George Washington’s grave that they can fix your problem, oh, and for pennies on the dollar. Some of these “firms” will take your cash and skedaddle, while others will string you along, taking your cash and making promises while helping your debts get even bigger. Such “offers” can be hard to resist, but you want to make sure you don’t wind up worse off financially than you are now.
The good news is that most debt relief companies are reputable and will work in good faith on your behalf.
What is Debt Relief?
Well, there are various forms of debt relief, but we’re focusing on “debt settlement” companies that are hired by people like you to go to your creditors and get them to accept less than what you owe to settle your debts. Creditors are motivated to work with negotiators because if you file for bankruptcy protection – your remaining move – they’re likely to be up the proverbial creek.
How Can I Tell If the Company’s a Scam?
There are a few things to watch for when considering a credit debt relief company.
- Asking for fees up front. That’s illegal. A company cannot collect fees before it has settled at least one of your debts.
- The company is not transparent. Before getting you to sign up, a debt settlement company must disclose the basics of its services, such as how long will the program take, how much it will cost, any associated risks and info about the dedicated account that you will set up to have cash to pay settlements.
- It misrepresents its services. According to the Federal Trade Commission, a company may not make false or unsubstantiated claims about its services.
- It offers sham “guarantees” to get you out of debt. While debt relief generally offers a great opportunity to start a new life, there are no guarantees in negotiations – of any kind. Be wary of any company that makes such promises.
- The agency won’t give you info about its services unless you give it info like credit card account numbers and debt balances.
- The company lacks accreditation. Make sure the American Fair Credit Council or the International Association of Professional Debt Arbitrators have accredited the agency in which you’re interested.
What Else Can I Do?
- Do your homework. Check with your state’s attorney general and your local consumer protection agency to see whether there have been complaints. You also should have no problem finding online testimonials about the company in which you’re interested.
- Educate yourself about disclosure requirements for debt settlement companies. Companies must explain their fee structure and estimate how long it will take to resolve each debt.
- Look askance at any claims that a “new government program” can get you out of debt. For one thing, were there a new program, you likely wouldn’t heard about it.
See? Spotting credit card relief scams isn’t all that difficult if you know what you’re doing. Yes, you’re in a tough financial situation but with some patience and due diligence, debt settlement can put the spring back in your step.