During this wrenching, endless period of economic doldrums, debt relief and debt reduction scams have spread like wildfire. With millions in financial trouble, credit card debt is a bigger problem than ever. 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 stay away from even the so-called legitimate debt reduction services.
A debt relief illusion
To provide debt reduction services, most companies pitching these programs offer loan consolidation plans in which you take out another loan to pay off existing debt. One more tactic is promising to persuade your creditors to settle for less than you owe. All they care about is signing you up, not whether or not their programs will actually work. When it comes to negotiating for a settlement, bear in mind that it will show up on your credit report as failure to pay the debt in full, which will subtract from your credit score.
Debt relief scammers
That financial predators sell themselves as legitimate companies with the ability to help consumers overwhelmed by credit card debt is no secret. The Los Angeles Times reports that investigators for the Government Accountability Office posed as distressed consumers seeking help from 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
After paying big up-front fees to debt management companies, often running to several thousand dollars, numerous consumers end up deeper in debt than they were before. MSNBC reports on the ordeal of a woman in North Carolina who fell for the pitch from a debt relief company that she would conserve enough with lower interest rates to pay off credit cards, a mortgage and a car loan five times faster. After paying $ 499 up front, she was assured that interest rate savings would make up for the fee within the first 30 days on her way to a total savings of $ 2,500. The Federal Trade Commission sued the firm after they refused to refund the $ 499 fee after failing to deliver on those promises.
A common debt relief ruse
A common trick played by debt relief scam artists today is “government approval”. Within the very same article, the Los Angeles Times reports that statements made by debt management companies to GAO investigators, as well as their ads, show that the firms try leading people to believe they are administrators of a government program related to the bank bailout. 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 one more.
Debt relief through self-discipline
There are hundreds of debt reduction and debt relief companies infesting the Internet, but there is no government-backed credit card debt relief program. Debt relief has become a huge industry designed to kick people when they’re down. Getting on a budget that allows you to pay your bills on time and pay down your debt is nevertheless the best route to debt relief. Individuals don’t need a debt management company to negotiate with creditors or refinance loans when they can do it themselves.
Debt relief advice you are able to trust
The National Foundation for Credit Counseling is a good place to start if you need help with debt issues. The NFCC is a nonprofit community organization that provides free and confidential debt management advice to any person that needs it. The NFCC offers consulting in person or by phone. Take a look at nfcc.org to find a counselor as part of your area.
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Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
