You may be lured by ads claiming to eliminate debt or credit problems quickly and easily. You can call a professional and pay them to wipe the slate clean, “guaranteed.” These proclamations of debt help sound promising, but are they legitimate?
The Federal Trade Commission advises they’re most likely scams.
When you’re in over your head, you are desperate for help. This is the perfect situation for debt relief scammers to prey on. Any rational person can fall victim to poor judgment when creditors are calling and the bills are piling up. If you find yourself in need of assistance when it comes to debt management, be sure you’re working with an honest agency.
They promise magic: You did not accumulate your debt overnight. The same will be true when you attempt to get rid of it. Any one who claims to be able to completely erase your debt, or remove negative but accurate items from your credit report, is simply not telling the truth.
You get a one size fits all plan: Your specific situation needs to be reviewed before any recommendations can be made. If the person you are working with lays out a debt relief strategy without first examining your particular circumstances, they have no intention of actually helping you.
You’re asked to pay up front: A company or agent that insists on payment for services they haven’t yet performed should be a red flag. Never agree to an up front fee for debt settlement–you’ll likely never hear from that person again.
According to the FTC, “Debt negotiation can be risky, and it can have serious, long-term consequences for your credit report and your ability to get credit in the future.” With this in mind, proceed with caution when seeking debt relief. Consider using the services of a credit counseling organization instead of a debt negotiation agency.
A reputable credit counselor can assist you in managing your debt, devising a budget and repayment plan and finding free resources for debt education and workshops. Instead of negotiating on your behalf, a credit counseling service teaches you how to manage your own debt.
Credit counselors are trained, certified and can easily be found. Note, however, that credit counseling can be costly and there is no guarantee your debt problems will be solved. Again, be sure any credit counselor you work with is legitimate. An accreditation by either the Association of Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling will point you toward a valid organization.
Ultimately, you are the only truly reliable source of debt help. Through education, responsible behavior and patience, you should be able to get your debt under control and begin paying it off on your own.