Avoiding Debt Relief Scams: A DIY Guide |
By Kari Johnson on June 8, 2011
.jpg.aspx?width=75&height=75) Debt is a growing problem in the United States. With a growing number of people feeling the strain of debt, more companies are popping up to provide debt relief. Unfortunately, the debt relief scams are also increasing as con-artists take advantage of those who are desperate and in need of help. There is good news: there are ways that you can spot potential debt relief scams.
There are a few things that legitimate debt relief help will not do. For instance, if the agency charges you high fees upfront, they tend to get the money and then not help with your debt (some companies illegally circumvent ban on advance fees). Also, they should not need much personal information at first. In fact, for a quote, all they should need is a list of your creditors’ names, the amount you owe them, and the interest rates they are charging you. If they ask for bank account information or your social security number, it is probably a trick.
There are also some laws that the legitimate for-profit debt relief companies must comply to. They cannot charge their client until they have successfully negotiated the reduction of at least one of the debtor’s accounts. One payment must be made to a creditor and a written contract must be established before they charge the debtor.
Before you get to this point, and even if they follow all of these rules, the best way to check a company’s legitimacy is to get references. You can get these from people you know who have gone through a debt relief program. They can tell you about the company they used and how successful it was. To simply check a company’s validity, the Better Business Bureau (www.bbb.org) can be used to see if the company follows the rules and what sort of problems people may have had with them.
If you get scammed, you can be out thousands of dollars, and worse off than when you began dealing with your debt. For that reason, it is very important that you look into the debt relief company you intend to use before you sign up or pay them. The best way is to check references, whether personal or online. No matter what these turn out, you can probably tell if something is not quite right with a debt relief company. Avoiding debt relief scams requires that you pay attention to what they ask of you and do some research into what you should expect or what the company has done before.
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