Unfortunately there are many companies seeking to make money from those who find themselves in financial difficulties. Most debt consolidation relief programs are legitimate, but some are not. These debt relief scams generally promise to alleviate the situation by reducing debts and stopping creditors’ demands, but the reality is that these types of scams can in fact make the situation worse. Debt relief lawyers specialize to help advise you on the best option to eliminate debt, get you on the right track, and avoid you from getting scammed. The worst type of scam is organized criminal activity: they will take money from people, promising to use it to negotiate with and fend off creditors but simply take the money. They usually take money only in cash or money order to minimize the risk of leaving a paper trail. The people who operate these scams often go to extreme lengths to make sure that they remain anonymous, changing company names, using internet sites and fake portals that can be quickly replaced or taken offline.
Another type of scam is to claim that the US government has grants available to help you with your debts. However, they also say that this information is not freely available and that you must buy it from them, in the form of a computer disc and a monthly subscription. However it soon becomes apparent that there are no such government schemes and that the information you have purchased is useless.
There are other less blatant types of scams in which the company will in fact contact your creditors and negotiate with them on your behalf, but will deduct a very substantial sum from the money you pay to them as ‘commission’. In some cases this can be up to fifty percent of the money you pay them! This is clearly a means of taking advantage of the desperation and anxiety of those who are trying to deal with the demands of creditors. Using this type of debt relief scam means that it will take a lot longer to pay off the debts than it would have done if you had negotiated directly with your creditors, or if you had approached a not-for profit organization for assistance.
Some of the other false promises that these types of scams make are: pretending that they are not for profit when they are in fact profit-taking companies and promising to lower the interest rates of all your debtors (which they do not have the power to do.)
Since the majority of scams rely on being untraceable and anonymous, it is important to check whether the company you are dealing with is upfront about their contact information. Providing only a PO Box address, without a physical address, telephone numbers or contact names is one telltale sign that a company doesn’t welcome refund requests!
If you are already employing the services of a debt relief company and are unsure of whether they are actually working for you, call one of your creditors to find out whether payments are being made on your behalf. If they are, find out how much money they are paying in installments. If they are paying less than you paid them, or if they are not paying anything at all you know you are being scammed. The good news is that there are legitimate agencies that can help. In particular, you are safest with a non-profit agency that conforms to AICCCA standards (Association of Independent Consumer Credit Counseling Agencies).
Although it can be tempting to ‘hand over’ your debt worries to a third party to deal with, the reality is that you will pay off your debts more quickly and take control of your situation sooner if you negotiate with your creditors directly. Creditors are likely to appreciate the fact that you are willing to talk to them and that you want to address your financial situation.
|If you are worried about your debts, it will help to talk about your circumstances with a bankruptcy attorney who will be able to advise you about your particular options.|