The long, deep recession and its aftermath have created an environment in which debt reduction scams and debt relief scams flourish. With millions in financial trouble, credit card debt is a bigger problem than ever. Predatory debt relief companies promising peace of mind are seeking out individuals drowning in debt. But with financial discipline and effort people can stay away from even the so-called legitimate debt reduction services.
Source for this article: Do not fall for credit card debt relief scams, just do it yourself by Personal Money Store
Debt reduction pitfalls
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 under you owe. In many cases just taking your upfront fee is all that matters, not actually reducing your debt. And one thing they won’t tell you is that paying less than you owe shows up on your credit report as failure to pay back your debt in full, which wreaks havoc on your credit score.
Debt relief in disguise
That financial predators sell themselves as legitimate companies with the ability to help consumers overwhelmed by credit card debt is no secret. 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
After paying big up-front fees to debt management companies, often running to various thousand dollars, many consumers end up deeper in debt than they were before. MSNBC reports on the ordeal of a woman in North Carolina who fell for the pitch from a debt relief company that she would conserve enough with lower interest rates to settle credit cards, a mortgage and a car loan five times faster. After paying $ 499 up front, she was assured that rate of interest savings would make up for the fee within the first 30 days on her way to a total savings of $ 2,500. The Federal Trade Commission sued the firm after they refused to refund the $ 499 fee after failing to deliver on those promises.
A common debt relief ruse
Claiming "government approval is a common angle pursued by debt relief scam artists today. In the 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 individuals to believe they are administrators of a government program related to the bank bailout. One business that shows up at the top of search engine rankings for debt relief calls itself the Federal Debt Relief Program. One more less-than-honest scheme is the "U.S. National Debt Relief Plan.
Debt relief – do it yourself
There are hundreds of debt reduction and debt relief companies infesting the Internet, but there’s 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 individuals. Getting on a spending budget that allows you to pay your bills on time and pay down your debt is nevertheless the best route to debt relief. Negotiating better terms or lower payments and refinancing car or home loans are actions you are able to take yourself.
Debt management advice—for free
For help with debt difficulties, the National Foundation for Credit Counseling is a good place to start. Anybody 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. To find a counselor with your area go to nfcc.org.
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Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
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