It can be so easy to get into credit card debt—and so hard to get out of it. That is why many people turn to debt settlement companies to solve their problems for them. These for-profit services will negotiate with your creditors to agree to a lump sum payoff that is less than the amount you owe. You will then make monthly direct deposits into an account held by the settlement company until you have enough to pay off the settlement. It may be tempting to try to settle your debt this way, but you must beware of the pitfalls and scams that often come with it.
Avoid Deceptive Debt Settlement Companies
Even legitimate settlement programs will cost you money, but deceptive programs may cost you even more. If you end up making a deal with a company who does not follow through on their promises, you could be out the money you paid to them and owe even more to your creditors. The Federal Trade Commission recommends avoiding companies that do any of the following:
- Charge any fees before it settles your debts
- Tout a "new government program" to bail out personal credit card debt
- Guarantee they can make your unsecured debt go away
- Tell you to stop communicating with your creditors, but don’t explain the serious consequences
- Tell you it can stop all debt collection calls and lawsuits
- Guarantee that your unsecured debts can be paid off for pennies on the dollar
As with anything, if it sounds too good to be true, it probably is!
Take These Steps to Protect Yourself
The FTC recommends contacting your credit card companies yourself to see if you can negotiate a settlement directly with them. If you would prefer to use a debt settlement service, do your research—ask about fees and read their disclosures. Don’t be duped simply because you are desperate. You may want to consider contacting the debt settlement attorneys at The Consumer Law Group. Unlike a for-profit debt settlement company, an attorney representing you has to a fiduciary duty to look out for your best interest. Plus, our attorneys are equipped with knowledge and experience of both state and federal laws governing the collection of debts. Contact us today!