Posted: Stephanie Stewart | July 29, 2016

News

Debt Relief Scams

Since debt relief programs deal with one's personal and financial information, it is important to avoid all of the scams and companies who make fake promises. A lot of companies trick people into paying a large fee upfront, but then fail to actually resolve or settle their customers' debt.

A Few Debt Relief Scams To Watch Out For


LowerMyBills.com

LowerMyBills.com is widely called a scam by customers, and has been known to sell personal customer information to salespeople. Even without pressing "submit," if customers input personal information into the website, the company saves it. People also report receiving multiple spam emails, and calls that don't stop after unsubscribing from the company.

Debt Pro 123

This company promises to reduce client debt by 70 to 80 percent, including all fees. Debt Pro 123 advertises settlements as low as 10 percent, and savings of 20 cents per dollar spent (including fees). It claims to make customers debt-free quickly and comfortably. Debt Pro 123's website even offers debt calculators.

However, research shows that more than half of consumers' monthly payments go toward defendant fees. Consumers who are in the program longer than 18 months have to pay a $49 monthly maintenance fee. Additionally, clients claim that Debt 123 promises to have a legal department to help customers, but they do not actually have one.

Southeast Trust

Southeast Trust claims to be a nonprofit debt relief organization, and has been know to contact hundreds of people through illegal robocalls (recorded automated sales calls). The company advertises 0-percent credit card interest rates-a huge red flag right there. The FTC actually filed a 2.7 million dollar judgment against this company.

How to Recognize Debt Relief Scams


One should look out for the following key warning signs:

  • Companies that charge fees before settling one's debt
  • Program that guarantee they can make unsecured debt disappear
  • Businesses that claim they can stop all collection calls and lawsuits
  • Companies that do not provide free information on services until one provides personal and financial information (bank accounts, credit card numbers, etc.)

 

How to Avoid Debt Relief Scams


You should never pay large sums upfront. Ethical companies will not charge anything until the debt has been settled, or resolved. It is important to read the company's fine print, and research their reputation. It is also helpful to explore feedback from previous customers who used the company's services. People should take everything with caution when investing time and money into a debt relief program. When companies "guarantee they can get their clients out of debt in a certain period of time, or promise "absolutes," these are big red flags. Scam debt relief programs can end up costing more money in the long run, and make matters a lot worse for people already struggling in debt.

 

Sources:
https://www.consumer.ftc.gov/blog/avoiding-debt-relief-scams
http://www.nolo.com/legal-encyclopedia/debt-consolidation-v-bankruptcy.html
https://www.washingtonpost.com/business/get-there/telltale-signs-of-debt-relief-scams/2015/10/15/b3fe20f2-712d-11e5-8248-98e0f5a2e830_story.html
http://www.moneymanagement.org/Community/Blogs/Blogging-for-Change/2013/May/Five-signs-you-are-being-scammed.aspx

 

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Written by Stephanie Stewart

Stephanie graduated in information systems with an emphasis in cyber security management. She enjoys spending her time hiking with her children and her dogs, and playing video games with her husband.

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