Having too much debt can make you feel like you’re spiraling down a black hole. Wishing your problems away doesn’t work, and you can’t see anything to help you overcome your financial situation. At this moment, when you’re worried about your future, a call from someone who claims to be able to help can seem like a literal life saver. But no matter how stressed about your debt you are, be wary. There are scams designed to take advantage of your fear, and most of the time they only make your debt situation worse. But how do you tell the scammers from the legit debt relief companies (who, most of the time, actually can help you)? Here are some tips on how to spot debt relief scams.
Signs of a Debt Relief Scam
National Debt Relief, which is one of the legit debt relief companies, lists three key red flags to watch out for.
First, most debt relief scams will ask for an upfront fee, before they’ve done anything to help your debt. They might tell you that the fee is necessary to become a customer, or that the fee will help get the debt relief process started. In most cases, though, once they have your money, you won’t hear back from them, leaving you in a worse situation than you started with. This differs from actual debt relief companies, who most of the time, only collect a fee after they have helped you. Once your debt has been settled, or you’ve gone through some other debt relief program, then they will charge you. This means that if they are not able to help you successfully, they do not ask for a fee. Therefore, legit companies will try as hard as they can to find a solution to your debt problems.
Second, debt relief scams will make it seem like they hold the key to your success. They’ll make promises and guarantees that they will solve all your problems. This is supposed to lull you into a sense of security, so that you willingly hand over your money. In reality, debt relief programs usually take months, sometimes even years, and there is no guarantee that they will work. A real debt relief company will make sure that you are aware of this, and that you understand the consequences of debt relief programs (such as a negative impact on your credit score). If someone tells you that they can make all of your debt go away overnight and with no consequences, be extremely wary. It’s probably a scam.
And finally, real debt relief companies will ask about your debt situation, your finances, and will try and get the “whole picture.” By contrast, the scammers usually skip past all of the details. They will tell you they can help you, no matter your situation. Real debt relief companies know that the types of debt you have and your saving habits will have an impact on your success, and so that is information that they will want. Avoid working with companies that don’t ask for all of the details and try to rush you through the process.
In addition, National Debt Relief warns that scam companies do not always use the proper terms when it comes to debt relief. For example, most debt relief companies use the word “clients,” while many scams use the word “customers” instead. If the company you are examining doesn’t seem very professional, be sure to research them very thoroughly. And speaking of research, do some checking up on a company before deciding to work with them. See if they’re listed on review sites, such as RateZip. Real companies will have testimonials from people who have worked with them, while you may find almost nothing on fake companies that only exist to scam you. With some common sense and the right amount of research, you can avoid the scams and find a debt relief company that will actually want to help.
Student Loan Debt Relief Scams
One of the most common types of debt is student loan debt, and as a result, many scammers are now targeting those with student loans. Many young people have large student loans and jobs with only moderate income; as a result, an option to help them get out of debt is a welcome sight. But just as before, one has to be wary of companies that make promises to solve all of their problems. In addition to the previous red flags mentioned, never give a debt relief company power of attorney. Doing so could allow them to take out even more student loans, putting you further into debt. And be sure to research your options so you know what kind of debt relief programs are out there. Scammers usually only give you one option, and try to tell you that that’s the only one there is. Coming armed with some prior knowledge can be incredibly useful.
What to Do if You’ve Been Scammed
If you’ve fallen for a debt relief scam, the most important thing you need to do is to accept it. Don’t try to deny that it’s a scam, or ignore it; doing so could only make the situation worse. If the scammers advised you to stop paying your debts while they “settled” them, you need to contact your creditors and check your accounts to make sure that you’re not going into even more debt. The Federal Trade Commission also advises anyone who has been scammed to file a report. This way, they can help prevent others from falling for the same scam.
Finding a Real Debt Relief Company
There may be scammers out there, but there are also of plenty debt relief companies who can actually help you. Remember: to check if a debt relief company is a reputable one, make sure they don’t have upfront fees, make sure they’re realistic with their promises, and make sure they ask about all of your debts. Also check to see they’re listed on other websites. RateZip lists several debt relief companies, including ClearOne Advantage, CuraDebt, Freedom Debt Relief and more!
Remember, if you are struggling with debt, there is help available.