When you’re facing mounting debts, every ringing phone or trip to the mailbox can become a stressful ordeal. Debt can impact just about every aspect of a person’s life – including your overall health and well-being. If you’re feeling trapped under burdensome debt, it’s only natural to start looking for ways to get out from under it all – or, at the very least, to find a solution that may make your monthly obligations more manageable.
Unfortunately, there are many scammers and fraudsters out there who prey on this vulnerability by offering what they claim is a light at the end of the tunnel – when, in reality, their real goal is just to leave debtors even more in the dark. Scam artists have been known to target people with significant debts – including credit card debt – with fake or misleading promises of relief.
As an example? A few years ago, the Federal Trade Commission (FTC), alongside the Florida Attorney General, stopped what they describe as a “massive debt relief scam.” Here’s how it worked:
“The defendants told people they would pay, settle, or get rid of their debts. But they didn’t. Instead, they just took people’s money. Over time, people found out that their debts were not paid, their accounts were in default, and their credit scores were severely damaged. Some people even got sued by their creditors, or were forced into bankruptcy.”
If you’re struggling with debt, it’s important to know who you can trust – and that includes being able to spot debt relief and credit repair scams, before they get the opportunity to lure you in with false promises (and zero results).
Here are a few key points to keep in mind, courtesy of the consumer protection experts at the FTC and the AARP:
1.) Are They Asking for Payment Upfront?
As the FTC has explained:
“How can you tell if you’re dealing with a debt relief scammer? Because they ask you to pay them before they do anything for you.”
In fact, it is illegal for a legitimate debt relief company to ask for payment upfront, before they actually make any efforts to settle or reduce a consumer’s debt.
Be conscious of how you’re being made to pay, as well. As the AARP puts it:
“Some take your money and run; others will string you along, collecting payments and making promises while you fall farther behind on delinquent accounts.”
2.) Are They Making Unrealistic Promises or Guarantees?
As the FTC has explained, some fraudsters that pass themselves off as debt relief agents do so by making promises that are unrealistic – or downright impossible to achieve.
Chiefly, the FTC notes, some scams “lure consumers to purchase their services by falsely claiming that they will remove negative information from consumers’ credit reports even if the information is accurate.” While inaccurate information or mistakes can be removed from your credit report, any real, correct data on delinquency, defaults or other problems must stay on your credit report for at least seven years.
Similarly, the AARP advises being wary of any guarantees regarding results. Every person is unique, and so, as the AARP puts it, “no company can ensure that it will reduce your debt by a certain amount or stop collection calls and lawsuits.”
The FTC sums it up succinctly (emphasis added): “No one can guarantee that your creditors will forgive your debts.”
Other signals that should send off warning bells? The AARP urges caution around any ads promoting “government debt-forgiveness programs” or a new “change in the law” that “will reduce, forgive or cancel student loans, credit card debt or other liabilities.” As the Washington Post notes, it may also pay to be cautious around promises about timelines, especially when you see buzzy words like “quickly” or “comfortably.” As the Post puts it, “the process of paying down your debts is long.. And if someone tells you different, don’t believe it.”
3.) How Much Information Is Out There?
Finally, remember to do your due diligence. Before interacting with any supposed debt relief organization, be sure to conduct some research with local and national consumer protection agencies, including the FTC, your state’s attorney general’s office, and watchdog groups like the BBB. There may already be reports or complaints out there.
Similarly, consumer protection experts advise being wary of any debt relief agencies that reach out directly to you. As the FTC notes, “some debt relief scams… tout their services using automated ‘robocalls’ to consumers on the Do-Not-Call List.” You may also be contacted unexpectedly via email.
As you research any potential debt relief organization, be skeptical of a group that appears to be withholding information. As the AARP explains, there are “disclosure requirements” for debt settlement companies:
“Among other things, they must explain all fees for and conditions on their services, estimate how long it will take to settle each debt, and lay out the risks of stopping payments to creditors… Don’t let a company enroll you in a debt relief program without reviewing your financial situation with you.”
Finally, keep in mind that there are other avenues for relief – such as working with an experienced local attorney, who may be able to help you negotiate with your creditors, and offer insights and guidance tailored to your specific financial situation.
Here at the Gunderson Law Firm, our highly experienced attorneys and staff bring unparalleled expertise and insight to matters of personal injury, real estate, and bankruptcy law. The Gunderson Law Firm represents a wide range of clients — individuals and companies, small and large, national and local — who turn to us for effective legal representation and informed, objective advice.
Have any more questions about looking out for fraudulent debt relief companies and scams? Facing the prospect of dealing with legitimate debt collectors and not sure where to turn? Looking for a Chicagoland attorney you can trust? Don’t hesitate to get in touch whenever you’d like to get the conversation started.