During this wrenching, endless period of economic doldrums, debt relief and debt reduction scams have spread like wildfire. The terrible economy has put millions of people in financial trouble and one of the biggest troubles is credit card debt. Predatory debt relief companies promising peace of mind are seeking out individuals drowning in debt. Even so-called legitimate debt reduction services charge hefty fees for something people can do themselves with financial discipline and effort.
Article Resource: Do not fall for credit card debt relief scams, just do it yourself by Personal Money Store
Debt relief dangers
Most companies offering debt reduction services pitch debt reduction services where you pay down existing debts with another loan. Offering to negotiate with your creditors for an amount less than you owe is an additional tactic. In many cases just taking your upfront fee is all that matters, not really reducing your debt. An essential thing to realize is that paying less than you owe is listed on your credit report as failure to pay in full, which damages your credit score.
Debt relief in disguise
It should be no secret that numerous companies promising to help consumers overwhelmed by credit card and other debts are financial predators that charge high fees but deliver little or nothing in return. The Los Angeles Times reports that investigators for the Government Accountability Office posed as distressed consumers seeking help from debt management companies. Sometimes promising debt reduction of up to 50 cents on the dollar, the companies made wild exaggerations of their success rates.
Debt relief deception
Big upfront fees—as much as a number of thousand dollars—collected by debt relief companies often leave their customers worse off than they were before. MSNBC tells the story of a woman in North Carolina who was promised by a debt management business that they would lower her interest rates enough to pay back credit card, mortgage and car loan debt three to five times faster. She was assured that for $ 499 she would save $ 2,500, and savings from lower interest rates within the first 30 days would more than cover the fee. The Federal Trade Commission sued the firm after they refused to refund the $ 499 fee after failing to deliver on those promises.
A common debt relief ruse
A common trick played by debt relief scam artists today is “government approval”. Within the exact same article, the Los Angeles Times reports that statements made by debt management companies to GAO investigators, as well as their ads, show the firms try leading people to believe they are administrators of a government program related to the bank bailout. One of these companies with a prominent Internet presence is called The "Federal Debt Relief Program". "U.S. National Debt Relief Plan" is one more.
Debt relief independence
There are hundreds of debt reduction and debt relief companies infesting the Internet, but there’s no government-backed credit card debt relief program. Desperate people in troubled times are fodder for a huge industry with a predatory business model. The best way to debt reduction is to get on a budget, pay down your debt and pay your bills on time. Individuals don't need a debt management business to negotiate with creditors or refinance loans when they can do it themselves.
The best debt relief advice is free
The National Foundation for Credit Counseling is a good place to start if you need help with debt problems. Free, confidential debt management help for everyone who needs it is available at this non-profit community organization. Advice is accessible either over the phone or in person from the NFCC. The site nfcc.org can connect you with a counselor inside your area.
Read more on this topic here
Los Angeles Times
latimes.com
MSNBC
msnbc.msn.com
NFCC
nfcc.org
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