When people are out of work and forced to live off of their credit cards, they often turn to less-than-ethical people and companies for debt relief. Not all debt relief agencies are scammers, but many of these companies engage in deceptive or outright illegal practices. Below, you’ll learn what to look for when choosing a debt relief agency.
Credit Repair Rip-offs
“Credit repair” is a deceptive term, which makes people think that a particular company can undo years of poor decisions and get negative marks off their credit reports. However, if the negative entry is true, it cannot be removed. The most a ‘credit repair’ company can do is act as a go-between for you and your creditors. Save time and money by disputing your own errors, for free.
Debt Settlement Swindles
A debt settlement company tries to negotiate with creditors to reduce your overall debt. However, most don’t realize that debt settlement will lead to negative marks on your credit history, and to possible tax ramifications. Some scams involve encouraging debtors to stop making payments, and to pay a certain amount each month to the settlement company. Unethical companies keep these payments, and your creditors keep pursuing you.
Debt Consolidation Fraud
In debt consolidation, you take out a line of credit or get a loan to combine all of your debts into one with a set interest rate. Debt consolidation is a legitimate process, but if the company isn’t an established lender or bank, be wary of their terms. Look for hidden fees, balloon payments or gradually increasing interest rates. If a company charges an upfront fee, take it as a red flag, and do not give out any sensitive information.
Predatory Companies
Scams in the debt relief industry are some of the worst because they work by ripping off those who are already in a precarious financial position. Some scams prey on fears of the unknown (what’s going to happen if I can’t pay?), and others play to people’s fears of creditor harrassment and bankruptcy. If you believe that a debt relief company is scamming you, we encourage you to talk to Bankruptcy Lawyers in Colorado Springs to review your options.
