Debt Relief Rip-Offs

Settlement companies prey on the vulnerable with abusive up-front fees & broken promises.

The Truth Behind Debt Consolidation/Debt Relief Companies

We’ve all seen the television commercials. Nervous, stressed out consumers being bombarded with collection notices and constant, harassing telephone calls. Then a calming voice offers “relief” from it all when you make one easy phone call.

With the housing market crash and a continuing recession, more and more Americans are finding themselves falling further behind on their credit card payments. Consumers who once used their credit cards only for special purchases have now had to use them for everyday living expenses. And the outstanding balances just keep growing. It is estimated that the average family is carrying $16,000 in credit card debt.

Additionally, once you make a late payment or miss a payment entirely, the credit card companies tack on late fees, penalties, and can even raise your interest rate. All of which contributes to a huge sense of desperation on the part of consumers.

The debt relief companies are counting on this desperation to lure in customers. Most people are so worried about their financial situation that when they hear these companies touting that they will cut their credit card debt in half, stop the harassing phone calls, and stop potential wage garnishments, they want to believe it’s true.

But the harsh reality is that these debt relief companies rarely do what they promise. Debtors end up paying enormous fees to these companies only to discover that their outstanding credit card debt is exactly the same as before, and maybe even higher due to more late fees and penalties. Investigations have shown that no more than 1% of customers actually received the services which they were promised.

Debt relief companies prey on the vulnerability of people who are suffering through financial hardships. They depend on consumers’ fear and ignorance and promise relief that they cannot deliver.

If you are faced with mounting credit card debt and need to take action, there are some things you can do that don’t involve using a debt relief company.

The first is to call your creditors yourself and explain the situation. Most credit card companies will try to work with you on some sort of reasonable payment plan. The truth is, it’s in their best interest to work with you rather than forcing you into bankruptcy in which case they may receive nothing.

If your creditors are at the point of filing a lawsuit or threatening to garnish your wages, you may need to speak to an attorney. The money you spend on this will be a smarter investment than paying fees to a debt relief company. Your attorney may also be able to negotiate a settlement with your creditors. Credit card companies are more apt to deal with a licensed attorney than some stranger from a debt relief company.

If you are in debt, you need to educate yourself about the options available to you and also understand the laws protecting consumers. Read the Fair Debt Collection Practices Act to better understand and know your rights under the law. It can be found at the Federal Trade Commission’s website.