In a country that has everything, it also has debt. The vast majority of Americans owe plenty when mortgages are included, but a large percentage also carry high balances, student loans, credit card balances, medical bills and auto loans. And that opens the possibility for debt relief scams, and they’re out there.
Fortunately, some wiggle room exists for unsecured debts like credit cards at least; depending on the financial circumstances and negotiating tactics involved. This is why may debtors turn to debt settlement as a means of climbing out of the hole.
If you want to enlist a third-party company to help settle your debt, you need to know how to tell a reputable company from a scam.

Here are four key ways to do so:
They Contacted You
In various facets of debt relief, a good rule way to gauge the civility of a conversation with a financial entity is who made contact with whom. Debt collectors and collection agencies will call, creditors typically won’t. In the case of settlement legitimacy, be wary of any company that reaches out unsolicited. How did they get your number? How did they know you needed debt relief services? Move on.
They Make Promises (to Settle All or a Certain Amount of Debt)
To this same effect, companies that are proactive in pushing their settlement services will say anything to lure an unsuspecting individual, including guaranteeing to settle a debt. While this would understandably sound like music to any debtor’s ears, it’s illegal and a clear sign of a scam. Per the Federal Trade Commission (FTC), no one can guarantee that your creditors will forgive your debts.
Another feature scammers like to advertise to target stressed, fearful and fatigued debtors is that they?ll stop communications from creditors and debt collectors. This also won?t happen. Numerous debt relief reviews mention that communications from creditors and debt collectors still occurred during the settlement process.
They Want Payment Upfront – A Classic Sign of Debt Relief Scams
Debt relief scams wouldn?t be scams if innocent victims didn?t lose money. Like any scam, debt relief narratives hinge on persuasion. Scam companies prey on people in desperate situations and ask for money at the height of their force. But again, per the FTC, this is an obvious sign of a scam:
?A legitimate debt relief company won?t make you pay up front. That?s illegal.?
Debt relief companies do charge a fee for their service. It?s usually between 15?25 percent of the original debt sum. However, this charge will only be valid if they successfully lower a balance and you agree to pay it.
They?re Light on Education and Pressure You to Start the Settlement Process
Debt settlement is a long process. Most companies advertise that their services take anywhere between two-to-four years to resolve. Since debt settlement involves debtors stopping creditor payments until an agreement is reached, credit scores take a hit.
These aren?t small side effects, and they should factor into every debtor?s decision about whether to go the settlement route. Of course, a typical scam narrative leans heavily on pressure instead of customer-first education. Any reputable company will learn about a debtors’ specific circumstances before educating them on potential strategies.
If an interaction with a company feels pressured and you?re not learning much about debt relief methods, the company?s either a scam or not worth your time.
As spending on plastic continues to increase and interest rates stay high, large consumer debt is nearly unavoidable. If you?re looking for a debt settlement company to help with some of your debts, keep these four key ways to tell a debt relief scam from a legitimate one freshly in mind.