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 difficulties is credit card debt. 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 individuals can keep away from even the so-called legitimate debt reduction services.
A debt relief illusion
Paying down 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. All they care about is signing you up, not whether or not their programs will actually work. And one thing they won’t tell you is that paying less than you owe shows up on your credit report as failure to settle your debt in full, which wreaks havoc on your credit score.
Debt relief scammers
It should be no secret that many companies promising to help consumers overwhelmed by credit card and other debts are financial predators that charge high fees but deliver little or nothing in return. 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.
Debt reduction false promises
Big upfront fees—as much as various thousand dollars—collected by debt relief companies often leave their customers worse off than they were before. MSNBC reports on the ordeal of a woman in North Carolina who fell for the pitch from a debt relief business that she would conserve enough with lower interest rates to pay back credit cards, a mortgage and a car loan five times faster. She was promised the savings from lower interest rates would pay for the $ 499 fee in the first 30 days and that her total savings would be $ 2,500. No interest rates were reduced, the company would not refund the $ 499 fee as they promised and also the Federal Trade Commission sued the firm.
A common debt relief ruse
Debt relief criminals today often try to exploit the “government approved” angle. Within the exact same article, the Los Angeles Times reports that statements made by debt management companies to GAO investigators, as well as their ads, show the firms try leading people to believe they’re administrators of a government program related to the bank bailout. One of these companies with a prominent Internet presence is called The “Federal Debt Relief Program”. An additional less-than-honest scheme is the “U.S. National Debt Relief Plan.
Debt relief independence
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 in these troubled times has become a huge industry co-opted by shysters taking advantage of desperate people. The best way to debt reduction is to get on a budget, pay down your debt and pay your bills on time. Negotiating better terms or lower payments and refinancing car or home loans are actions you can take yourself.
Free debt management advice
For help with debt issues, the National Foundation for Credit Counseling is a good place to start. The NFCC is a nonprofit community organization that provides free and confidential debt management advice to everyone that needs it. You can consult with them over the phone or in person. Have a look at nfcc.org to find a counselor as part of your area.
Additional info at these websites
Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
