Debt Settlement Red Flags

Editorial Team

Debt Settlement Red Flags

Debt relief is an effective way to get back to ground zero, in terms of your finances. The good news is that there are legitimate agencies that are ready and willing to help you. In fact, most such companies are on the up and up. But that’s no solace if you’re one of the ones who need help but instead come across a crook who is more than happy to take advantage of your emotional state. These bad actors are eager to separate you from your money – cash you can ill-afford to lose — while doing little, if anything, to help you.

Thank goodness there are debt settlement red flags that can help you spot scammers. Keep reading.

The Issue

When you’re up to your hips in debt, anything you hear or read that pledges to get you out of trouble can feel like a gift. You may even get a phone call from someone who breathlessly guarantees they can hook you up, and oh, for just pennies on the dollar. Some companies will take your money and ghost, while others will string you along, taking your dollars and making vows, while your obligations continue to grow. While such proffered help can be difficult to resist, you want to be certain you don’t end up in worse shape than you are now.  

Explain Debt Relief

Debt relief comes in many forms, but here we’re discussing debt settlement, a financial strategy that involves hiring a company to negotiate with your creditors to get your obligations reduced. In fact, the negotiators’ goal is to have your creditors accept less than what you owe, in a one-time payment in full, to “settle” your debts. Creditors know that if they turn you down, you’ll likely file bankruptcy, a move that will likely net them little, if anything. But you do need a credible and effective debt settlement company. One such company is Freedom Debt Relief, as borne out by debt relief company reviews.

Debt Settlement Red Flags

When keeping an eye out for debt relief scams, pay special attention to companies that:

  • Demand payment up front. That’s illegal, by the way. It’s against the law for a company to attempt to collect fees before it has settled at least one of your debts.
  • Lack transparency. Before getting you to enroll, a debt settlement company must describe its basic services, telling you how long it will likely take before your debts are settled and how much the program will cost. It must also explain any associated program risks and provide information about the escrow-like account you will set up for the purpose of paying your settlements.
  • Misrepresent their services. Companies are prohibited from making false or unsubstantiated claims about its services.
  • Offer “guarantees” to get you out of debt. In general, debt relief offers a terrific opportunity to start anew. However, there are no guarantees in any kind of negotiations. Turn your heels on any company that makes such promises.
  • Won’t supply info about its services unless you provide data such as credit card account numbers and debt balances.
  • Lack accreditation. Make sure the company in which you’re interested is accredited by the American Fair Credit Council and the International Association of Professional Debt Arbitrators.

Other Actions You Can Take

  • Do your research. Contact your state’s attorney general and your local consumer protection agency to see whether there have been complaints, and how they were handled. It should also be easy to find online testimonials about your prospective company.
  • Educate yourself about disclosure requirements for debt relief companies. Companies are required to explain their fee structure and provide as estimate as to how long it will take to resolve each debt.
  • Claim the existence of a “new government program” that can get rid of all your debt. If there were such a new program, you likely would have heard about it.

These debt settlement red flags can keep you from getting taken at a time when you desperately need help – not someone who’s out to hurt you. As we say, you don’t want to play around here. You need a company with experience, accreditation, and credibility. Freedom Debt Relief offers that.