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Escape debt settlement scams: know when to run

On Behalf of | Mar 7, 2018 | Avoiding Bankruptcy

Debt relief scams are not all that uncommon in Florida. A phone call promising to get rid of overwhelming debt may at first seem like an answer to prayer, but last year, the Federal Trade Commission warned against such imposters.

The promises had seemed too good to be true, the FTC says. The callers claimed their agencies could “pay, settle, or get rid of” mountains of debt entirely. Rather than freedom from their indebtedness, however, families discovered they had actually fallen deeper into a black hole of bad credit and defaulted accounts. 

The FTC explains how scammers take advantage of those wanting to climb out of debt:

  • By guaranteeing creditors will forgive loans
  • By making debtors pay an up-front fee
  • By claiming they can easily take care of all bills

The Consumer Financial Protection Bureau issues strong warnings regarding debt relief impersonators, too, stating “debt settlement may well leave [individuals] deeper in debt than when [they] started.” The CFPB recommends contacting the local consumer protection agency or Florida’s Attorney General before settling with any relief service. 

The CFPB also provides some guidance for avoiding illegitimate services. As mentioned previously, any organization that requires some form of payment before settling any bills is not legitimate. Those that state they can unequivocally erase debt are also not lawful. If a caller from a debt relief company suggests he or she can prevent future calls from collection companies, he or she is not being truthful. Finally, if agencies claim the government will bail individuals out completely, they are not trustworthy. 

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