Debt relief can be a big help for people when they’re struggling to pay off their bills. But the industry also attracts a lot of people who want to take advantage of those in less fortunate circumstances. Here are some red flags to watch for when spotting debt relief scams.
You Can’t Get Any Resources Without Paying First
This is one of the most typical signs that a seemingly legitimate debt relief agency is actually a scam. No matter who you go to for debt relief services, they should offer you a few basic things free of charge. This might include things like an initial consultation or credit counseling.
When you work with credit counselors, you’re going to get some information on ways you can improve your credit. They can do things like give you basic budgeting advice, or explain your credit score. Many people who are deep in debt will find they need additional services beyond just credit counseling, which is why they then turn to debt relief agencies. Even though you’ll have to pay for debt relief services when you eventually decide to work with an organization, this should come after you’ve received services.
Don’t trust any enterprise that’s requiring upfront payments before they’ve done anything. If it feels wrong, it probably is. And it’s a lot better to move onto the next organization than it is to be ripped off by that one.
What They’re Offering Sounds Impossible
There’s an old saying that goes, “If something sounds too good to be true, it probably is.” Those words can save you a lot of headaches in life. And they absolutely ring true when it comes to evaluating a debt relief company. There are plenty of legitimate debt relief organizations out there.
Reviews are a great resource for helping determine if the company is legitimate or not. Do some online searching to find reputable, well-reviewed organizations. You can go and look at Freedom Debt Relief reviews, for instance. There, you’ll see real reviews from thousands of people who have enrolled in this particular program.
But it’s important to go into looking for a debt relief company with a skeptical attitude. When trying to find the right company for your needs, it’s better to walk away than to sign up with the wrong people.
Think about it: People seeking out debt relief aren’t typically in a great place financially. Oftentimes, they’re desperate to find a way to unload some of their unmanageable debt. This is exactly the kind of scenario someone might try to take advantage of if they have bad intentions. Do your due diligence and avoid falling into one of these scammers’ traps.
They Promise You To Much – A Sure Sign of a Debt Relief Scam
There are no guarantees in the world of debt relief. Any legitimate agency will acknowledge this aspect of the business. You should see immediate red flags if you encounter a debt relief company that says it can guarantee a certain result for you.
It’s one thing to say that they’ve done X, Y, and Z for past customers; it’s something completely different if a debt relief agency guarantees improvement. It’s wise to just head in a different direction – and fast – if a debt relief agency tries to tell you they can guarantee certain outcomes. That’s just false, and they’re probably going to lie to you in other ways as well.
No one can be totally foolproof when it comes to catching scams. People who want to rip you off will find dastardly ways to make themselves seem legitimate. It’s important to heed online reviews, and just listen to your gut, when deciding if a debt relief company is actually a scam.
The only debt relief help I have ever utilized that wasn’t a scam, was the credit counseling I had to take almost 10 years ago when I had to, unfortunately, file for bankruptcy, to remove my ex-husband’s debts off my credit. This specific counseling made me look real close to how I manage a budget and how to set limits on spending. You do not need a debit/relief program to do this, you just need to face facts. Being the age group I am in, putting my expenses down on paper (hardcopy) works better than using digital notation. If you are using any of the credit monitoring services, like Creditwise, (most credit cards today offer this for free along with your credit score). You get at least a monthly glimpse of how you are utilizing credit and how you are controlling your debts. You can get this also with Intuit which is part of the e-filing service for processing your taxes. With all the hacking and attempts to get our information, it pays to keep yourself aware. As I said, I like to put this information down on paper to make myself more aware especially when I do a biannual revision of my budget, thanks to price increases (which is how I know that this time of year is when all prices everywhere go up, including groceries.
I get constant emails and flyers claiming they can erase my debt and I always delete or throw away the flyers. Now there is a debt-relief program thru the courts via one of the bankruptcy which puts you on a determined budget within a given time period to pay off all debts which leave no discretionary funds for that impulse buys like that daily coffee run, with you paying the court or they dock your paycheck, not the best situation.
I read a newsletter called the PennyHoarder which gives different ways to get rid of debt, living in reality without removing key adult necessity bills (some of them talk about shared housing or not having a housing payment to remove a high debt which is not geared to someone who is head of household). All of us would be out of debt if we didn’t pay housing costs and got it for free. But paying down debt sensibly and living within a reasonable budget is possible without using scam services. None of those, especially those who are not using the court system to remove your debt will help.
I agree completely with what you’ve written MariaRose. I think a lot of people sign up with debt relief services thinking they’ll work some sort of miracle. But having worked in credit myself, I know the only “miracle” is your own effort. In fact, if there is a secret to getting out of debt – or doing anything financial – it’s learning to live beneath your means. You’ll need to do that if you want to get out of debt, save money, and build a more comfortable life.
The pastor at our former church described it as “margin”. He said that in order to be successful at anything in life, whether it has to do with money, lifestyle, relationships, occupations, etc., we need to build margin into our lives. It’s that buffer that keeps us from living on the edge, which is exactly where all the stress is, and where disaster lurks around every corner.
More and more churches are helping w debt management classes-similar to the Dave Ramsey ones Now when I close my real estate loans, many of the borrowers have to sign a form stating that if they get behind in their payments, they agree to take financial counseling classes.
That’s a good idea Ruth Ann. But why not have them take the counseling classes before taking the loan? From my own experience in the mortgage business I was sure a lot of people weren’t really sure what they were signing up for. Oh, sure, they wanted to own a house. But it was the financial responsibility part they were fuzzy on.