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Debt Settlement 5 Warning Signs

Debt Settlement Scams

Debt Settlement Scams

If you’ve maxed out your credit cards and don’t know how you’re going to pay off your debts, you may think that a company that promises to erase the debt for pennies on the dollar is the answer to your prayers. Not true! Debt settlement can be risky, and it can have serious, long-term consequences for your credit report and your ability to get credit in the future. Debt settlement scamsseem to be everywhere.

Listen to these PSAs from the Federal Trade Commission on Debt Relief Services
Download the “Debt Relief Services” mp3
Consequences
Illegal Fees
Payment Plan
Government Program Scam

Debt Settlement – 5 Warning Signs

If you get a sales pitch from a debt relief firm, pay attention to the details. Stay away from any company that:

  1. promises that unsecured debts can be paid off for pennies on the dollar. The truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet always is to contact your creditor directly and as soon as you are having problems making payments.
  2. requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you. The truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee – a percentage of the money you’ve supposedly saved.
  3. tells you to stop making payments to or communicating with your creditors. The truth is that if you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score also will be hurt by not making payments.
  4. claims that creditors never sue people for not paying their unsecured debts. The truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
  5. claims that they can remove accurate negative information from your credit report. The truth is that no company or person can remove negative information from your credit report that is accurate and timely. It’s illegal.

source: ftc.gov

Aurora Illinois Bankruptcy Attorney Bradley Covey - Bankruptcy: not a failure...A Fresh Start! Let Bradley Covey help you understand your bankruptcy options including Chapter 7 and Chapter 13 bankruptcy. Call Today A Fresh Start!
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by Bradley Covey

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About Bradley Covey

Bradley Covey is an Illinois bankruptcy attorney helping individuals and businesses file Chapter 7 bankruptcy and Chapter 13 bankruptcy in Kane County, DuPage County, Kendall County and Will County, Illinois. Brad attended SIU undergrad and NIU College of Law. Brad served in the military at Ft. Stewart, Georgia and Ft. Sill, Ok as a Field Artillery Officer. Brad later served in the Illinois National Guard as a Major.