Credit Card Debt Relief That Isn’t
Scam victims are often financially devastated after a relationship scam ends and often turn to debt relief companies. Many times they turn to debt relief services to help, only to find they are being scammed again.
What Is A Debt Relief Company?
A debt relief company is a business that helps people get out of debt by negotiating with creditors to lower the amount owed. Debt relief companies typically charge a fee for their services, which can be a percentage of the total debt or a monthly fee.
There are two main types of debt relief plans: debt settlement and debt consolidation.
1. Debt settlement is a process in which a debt relief company negotiates with your creditors to lower the amount you owe. This is done by convincing the creditors that you are unable to repay your debt in full and that they are better off accepting a lump sum payment in a settlement.
To enroll in a debt settlement program, you will need to stop making payments on your debts. This will damage your credit score, but it is necessary to convince creditors to accept a settlement. The debt relief company will then use the money you have been paying into the program to negotiate with your creditors.
The amount of time it takes to complete a debt settlement program varies, but it can take several months or even years. Once the program is complete, you will no longer owe the debt that was settled. However, you will still owe any interest that accrued on the debt during the time you were not making payments.
2. Debt consolidation is a process in which you take out a new loan to pay off your existing debts. This can help to lower your monthly payments and make it easier to manage your debt.
To enroll in a debt consolidation program, you will need to apply for a loan from a debt consolidation company. The amount of the loan will be based on your income and debt. Once you have been approved for the loan, you will use the money to pay off your existing debts.
Debt consolidation can be a helpful way to get out of debt, but it is important to compare interest rates and fees before you choose a company. You should also make sure that you can afford the monthly payments on the new loan.
If you are considering using a debt relief company, there are a few things you should keep in mind:
- Beware of scams. There are many unscrupulous debt relief companies that prey on people who are struggling with debt. Do your research and make sure the company you choose is reputable.
- Understand the fees. Debt relief companies typically charge fees for their services. These fees can be high, so make sure you understand what you are getting into before you sign up for a plan.
- Be prepared for a hit on your credit score. When you stop making payments on your debts, your credit score will take a hit. This is a necessary part of the debt settlement process, but it is something to be aware of.
- Make sure you are ready to commit. Debt relief can be a long and difficult process. Make sure you are committed to making the payments and following the plan before you sign up.
If you are struggling with debt, a debt relief company may be able to help. However, it is important to do your research and understand the risks before you sign up for a plan since they can just as easily be another scam.
According To The Federal Trade Commission:
Say you’re struggling to pay off your credits cards — which is already difficult with high-interest rates — and you hear about a company that promises to reduce or eliminate your credit card debt for a fee. Sounds great, right? But how can you tell if that offer is legitimate or a scam?
The FTC recently announced settlements with the operators of a deceptive debt relief scam. The FTC sued the three operators and their related companies (which went by multiple names including ACRO Services) for taking tens of millions of dollars from people by falsely promising to eliminate or reduce their credit card debt. The scam charged people fees in the thousands of dollars and even told them to stop making payments to their credit card companies — leaving people in a far worse position — with damaged credit and owing their original debts plus thousands in fees and interest.
As part of the settlements with the FTC, these scammers are permanently banned from running any debt relief services or engaging in telemarketing, and they must turn over assets that will be used to provide any possible refunds to people affected by the scam.
Follow these steps to spot and avoid credit card debt relief scams:
- Don’t pay upfront. It’s illegal for a debt relief company to charge you a fee before they do anything to relieve your debt.
- Talk with your credit card company. For free. Call the customer service number on the back of your credit card. Ask for a payment plan that you’ll be able to afford.
- Consider a reputable credit counselor. They can help you develop a payment plan that works for you.
Report all suspect debt relief services to the U.S. Federal Trade Commission at https://reportfraud.ftc.gov/#/?orgcode=SCARS – the FTC will also send a copy of your report to the FBI, so you don’t have to bother.
After you have been scammed, you have to be much more careful. Ask your friends or family before making any significant financial decisions. Let them help you to check things out and see if there is the potential to be defrauded again!