The long, deep recession and its aftermath have created an environment in which debt reduction scams and debt relief scams flourish. The terrible economy has put millions of people in financial trouble and one of the biggest troubles is credit card debt. People drowning in debt are easy targets for unscrupulous debt reduction services promising relief from all that stress and anguish. But with financial discipline and effort people can keep away from even the so-called legitimate debt reduction services.
Debt relief dangers
Paying down existing debts with more debt is a common tactic of companies hawking debt reduction services. Another tactic is promising to persuade your creditors to settle for under you owe. Too often what matters most to them is taking your money, not helping you reduce your debt. An essential thing to realize is that paying less than you owe is listed on your credit report as failure to pay in full, which damages your credit score.
Debt relief scammers
Financial predators posing as companies promising to help consumers overwhelmed by debt that take the money and run are exposed and documented. The Government Accountability Office, as reported by the Los Angeles Times, sent investigators posing as financially distressed consumers to certain debt management companies. The companies gave them wildly exaggerated descriptions of the firms’ success rates and sometimes promised savings of as much as 50 cents on the dollar.
Debt relief deception
Big upfront fees—as much as several thousand dollars—collected by debt relief companies often leave their customers worse off than they were before. MSNBC tells the story of a woman in North Carolina who was promised by a debt management company that they would lower her interest rates enough to pay back credit card, mortgage and car loan debt 3 to five times faster. She was assured that for $ 499 she would conserve $ 2,500, and savings from lower interest rates within the first 30 days would more than cover the fee. The Federal Trade Commission sued the firm after they refused to refund the $ 499 fee after failing to deliver on those promises.
A debt relief scam trend
Debt relief criminals today often try to exploit the “government approved” angle. The Los Angeles Times article reports that advertisements by debt management companies, as well as statements by business representatives to GAO investigators, provided evidence that the firms lead clients to believe their services are part of a government program comparable to the recent bailout of troubled banks. The “Federal Debt Relief Program” is the name of one company at the top of search engine results. ”U.S. National Debt Relief Plan” is an additional.
Self reliance is the best debt relief
There is no government-backed debt relief program among the hundreds of companies online falsely claiming they are. Debt relief has become a huge industry intended to kick people when they’re down. The best way to debt reduction is to get on a budget, pay down your debt and pay your bills on time. If you’re struggling to make payments, contact your lenders to see if you are able to negotiate better terms, lower payments or refinance a car loan or home loan.
The best debt relief advice is free
If you aren’t certain how to solve your debt troubles, contact the National Foundation for Credit Counseling. Free, confidential debt management help for anybody who needs it is available at this non-profit community organization. Advice is accessible either over the phone or in person from the NFCC. The site nfcc.org can connect you with a counselor with your area.
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Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
