It can be difficult to turn on the TV or surf the internet without seeing an ad for a debt relief company. For so many people struggling with finances, it can seem to be the answer to all of their money problems and help them avoid filing for bankruptcy.
However, many of these companies are offering only empty promises. Debtors are told to stop making payments to their creditors, instead sending money to the debt relief agency that they have hired to help them get out the hole. Many debt relief companies do not have experience negotiating with creditors, which means that the debt will keep piling up.
One company operating in Florida was recently fined by the Federal Trade Commission due to claims made in the company's advertisements. The company promised that it could help debtors eliminate up to 40 to 60 percent of their debt. However, the agency discovered that the fees the organization charged for these services would actually result in costs that would be up to 30 percent of the total debt a consumer owed, making it actually a debt reduction of only 10 percent.
Working with a debt relief agency can have serious negative consequences for individuals. Debtors may be sued by their creditors and see their wages garnished or have liens placed on their homes, and may end up in worse financial trouble then when they started working with the company.
When experiencing financial difficulties, it is important to work with individuals who can give you a complete picture of the options that are available. By knowing exactly what you can do to help reduce your debt, you will know if bankruptcy is the right choice for you. The decisions you make at this time can be difficult to reverse.
Source: ACA International "Debt Relief Operation Settles with FTC for Allegedly Deceiving Consumers by Using Bogus and Unsupported Claims"