If you’re one of the many Americans seeking a solution to serious debt, chances are you’ve done some research online already. But there are a lot of sources and opinions floating around out there. Some people swear by debt relief because they worked with a legitimate organization to successfully settle their debts; others warn you to stay far away because they became the victims of a scam.
It can get confusing when you see one person talking about how they settled $30,000 in debt for just $10,000—but then you turn around and see someone else talking about how they inadvertently paid thousands to a dishonest company before getting sued by creditors.
How can you protect yourself against potential debt relief scams and get legitimate help with major debt? Look for these five signs before proceeding.
#1: Sets Realistic Expectations for Outcomes
Perhaps the biggest red flag is any organization that guarantees results. Any company that guarantees to relieve 100 percent of your debt is making a promise that’s too good to be true just so you’ll enroll. Any program that pledges to relieve X amount of debt within a certain time frame is also making promises beyond their scope of control. Furthermore, if a business promises results while sugarcoating possible consequences of debt relief, it shows they’re willing to trick you to get your money.
Legitimate companies will set realistic expectations for outcomes, demonstrating that you could settle your debts for a fraction of the original balance due—but that there’s no possible way to guarantee any certain results. Debt settlement, after all, is a process with many factors rather than a quick cure.
#2: Will Not Collect Fees Up Front
As Freedom Debt Relief co-founder Andrew Housser points out, collecting debt settlement fees up front has been illegal since the Federal Trade Commission enacted the Advance Fee Ban back in 2010. Legitimate organizations abide closely by these regulations, collecting a fee only after they’ve negotiated a debt for a client.
Yes, debt relief organizations require a fee in exchange for their services. But enrollees in legitimate programs only pay once a debt’s been negotiated on their behalf. Consider it a red flag when an organization asks for fees before doing their part.
#3: Will Provide Information Before You Enroll
If you feel you’re still in the dark on the specifics by the time you’re asked to sign on the dotted line, you’re probably working with an unscrupulous company.
Legitimate partners will be happy to provide information up front about what they do, what your role in debt relief will be, how much they’ll collect in fees, how long you can expect the program to take, how you can contact customer service, etc. They will also remain transparent about both the pros and cons of debt settlement, like the fact the process will dent your credit score. They’ll give you this information before asking you to provide your financial account numbers, too.
#4: Will Review Your Finances with You First
Beware of companies that make it too easy to enroll, almost as if just anyone could qualify within seconds. Reputable companies will vet your specific financial standing—like how much you owe and what kind—to make sure you’re a suitable match for debt settlement.
#5: Has Positive Customer Reviews Online
Look to see what other people are saying about their experiences with a company. It’s a good sign if you can find both positive and negative reviews from real consumers, although the positives should outweigh the negatives.
If you can verify these five signs a debt relief organization is legitimate, then you can feel more at ease moving forward with them.
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Thanks for raising this up. Do you think financial debts might be connected with depression? Does therapy help?