During this wrenching, endless period of economic doldrums, debt relief and debt reduction scams have spread like wildfire. The terrible economy has put millions of individuals 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. Even so-called legitimate debt reduction services charge hefty fees for something people can do themselves with financial discipline and effort.
Source for this article: Don’t fall for credit card debt relief scams, just do it yourself
A debt relief illusion
Paying off existing debts with more debt is a common tactic of companies hawking debt reduction services. Other debt reduction services will offer to negotiate with your creditors to arrange a payoff for less than you owe. Too often what matters most to them is taking your money, not helping you reduce your debt. An important 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 have been exposed and documented. The Los Angeles Times reports that investigators for the Government Accountability Office posed as distressed consumers seeking help from debt management companies. Making wild exaggerations of their success rates, some companies promised savings of as much as 50 cents on the dollar.
Phantom debt reduction
Often consumers end up deeper in debt than they were before paying big upfront fees to debt management companies—which could be various thousand dollars. An MSNBC report exposed a debt management business that promised a woman in North Carolina that they would lower her interest rates on credit card balances, a mortgage and car loan low enough to pay them off five times faster. She was assured that for $ 499 she would save $ 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.
The latest debt relief trick
Debt relief criminals today often make an effort 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. One of these companies with a prominent Internet presence is called The "Federal Debt Relief Program". "U.S. National Debt Relief Plan" is one more.
Do-it-yourself debt relief
Of all the hundreds of debt reduction and debt relief opportunists spreading across the Internet, not one is part of a government-backed program. Debt relief has become a huge industry designed to kick individuals when they’re down. Getting on a budget that allows you to pay your bills on time and pay down your debt is still the best route to debt relief. If you are struggling to make payments, contact your lenders to see if you can negotiate better terms, lower payments or refinance a car loan or home loan.
Debt management advice is free
For help with debt difficulties, the National Foundation for Credit Counseling is a good place to start. Anyone who needs free and confidential advice about debt relief can get it from this non-profit community group. The NFCC offers consulting in person or by phone. The website nfcc.org can connect you with a counselor as part of your area.
Read a lot more on this topic here
Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
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