How People Are Conned By Debt Settlement Scams
Lovers of the ‘Plastic”
It is no surprise that millions of Americans are drowning in debt. With the lure of credit cards and various gimmicks used by companies to get you hooked on a long term payment plan that has such high interest rates, it is no wonder that people are frantically trying to get solutions to their financial distress.
They Know You Are Desperate
Debt settlement companies know the dilemma that is in most people’s lives when it comes to their financial status and they take advantage by advertising all these attractive offers that make people go running to them for help. Debt settlement scams are everywhere. You might blink and plop! There it is!
Whoever said “When the deal is too nice, think twice” wasn’t lying.
Making a payment every month seems like a convenient and reasonable plan, but don’t be quick to jump into that band wagon until you know all the facts.
Make no mistake; debt companies are from profit firms and as much as the promise to get you out of debt seems valid, they are in it more so for them than for you. Even a con man while out to get your money, wears a suit, so just because it is appears legit does not mean that it is.
Sugar Coated Lingo
Debt settlement scams have the following in common. They all promise you the Promised Land of debt free financial freedom. Some examples of common phrases they advertise are:-
“Settle and Resolve your debt in one monthly payment.”
“You shall be free of debt in 24-48 months.”
“Credit Card payments getting out of hand? Get free quote here!”
“Decrease your debt up to 75%.”
How It Works
I’m sure you have heard it all and it looks very appealing if you are crippled by debt. When you have a huge amount of money you owe and go to one of these debt settlement companies, you start paying your monthly payment since everything looks promising. What they don’t tell you is that while you are busy making these payments, none of the money is going to your creditors. Instead, they are putting it in a special account for it to accumulate. When it has risen to a certain amount, they take their cut which is almost over 20% of your debt.
Don’t forget that they also charge you for setting up the account. They then continue to wait for more money to accumulate. When it reaches a certain amount, can you imagine that is when they call the creditors to settle an amount?
Meanwhile, your debt has not been resolved or reduced.
What is worse, the negotiations with the creditors might hit a dead end. They may agree to the proposed settlement or may not. Is that a debt settlement scam or what? You decide.
Other Factors You Should Be Weary Of
Debt settlement scamsare obvious when it comes to the red flags they wave; only that we are so debt stricken, we do not want to see, only react. Some factors you should really look out for are:-
Debt settlement companies have no prior contact with creditors. When you seek them out to help you out with your debt, they do not call the creditors until they have a certain amount of money from you, of which they take a percentage first. Creditors don’t have to listen or comply with their settlement suggestions. In fact, some creditors turn up the heat by trying to collect their debt if they get wind of your debt settlement attempt.
Debt settlement companies will actually tell you to stop making your payments to the creditors. That is because they have every intention of profiting from you. The money you would have paid your debtors instead goes to them. Does that even make sense? When you cease making money towards your debt, you shall be hit with late fees charges and the debt continues to grow.
Furthermore, your credit score steadily deteriorates. The FTC (Fair Trade Commission) warns citizens to be weary of companies that will charge a fee before it even attempts to settle your case. Debt settlement scams end up putting you in a far worse situation than when you started out.
In the event that a debt settlement company is able to settle your debt with your debtors, it really does not give you relief. Your credit is still going to look bad and you will have a lot of difficulty trying to get anything on credit. You may even be taxed on the debt that was settled. Debt settlement scams are real and it is better if you explored it a little bit further because truth be told; not every one of them is a debt settlement scam.