Managing finances in today’s economy is no easy task. One financial emergency or unexpected repair bill can quickly lead to unmanageable debt.
Unfortunately, there are unscrupulous organizations taking advantage of people seeking help after falling behind on their bills.
Federal Trade Commission warning
The Federal Trade Commission (FTC) has warned consumers about debt relief and credit repair scams.
Essentially, in exchange for a large up-front fee, a company promises to negotiate with a person’s creditors to settle or significantly reduce outstanding debt. After collecting its fee, the company does little to no work on behalf of the consumer.
Companies may also offer credit repair services. For a large up-front fee, the company promises to remove negative information from a person’s credit report, but then after collecting the fee, fails to deliver on the promise.
Warning signs of a scam
To be clear, there are legitimate nonprofit organizations dedicated to helping people with debt relief and credit repair. But there are also a lot of bad actors looking to take advantage of consumers. So how can you protect yourself?
The two biggest warning signs of a potential debt relief or credit repair scam is an organization contacting you through an unsolicited call and asking for fees upfront. FTC rules generally prohibit for-profit companies that sell debt relief services over the phone from charging up-front fees.
Other warning signs include a company making specific promises that sound too good to be true. No company can guarantee any particular result, so be cautious if a company is making definite promises of a particular result.
Consult an attorney
If you are experiencing unmanageable debt, it is a good idea to consult an experienced attorney for assistance. In many cases, there are ways to address debt while protecting your hard-earned assets. An attorney can advise on potential options for financial relief, including negotiating with creditors or filing for bankruptcy.