Just about everyone has seen advertisements for companies offering debt relief. These ads seem a lot more appealing to people who are actually in debt with no foreseeable way out. In truth, there are few legitimate debt relief companies. The majority are designed to rip consumers off, taking the last few dollars they have left to get them enrolled in programs based around promises that are never fulfilled.
Debt Relief Warning Flags
People who are considering participation in various debt relief programs should be immediately be on their guard if potential companies request large upfront fees for their services. According to MSNBC, a company that requests more than $50 upfront for providing debt assistance is asking too much. It should also raise a red flag if certain companies are very vague with details — failing to explain exactly how monthly payments would be distributed and what any extra upfront or monthly fees would go toward. Thanks to the Debt Settlement Consumer Protection Act, companies are not able to get away with such practices as rampantly as they were before, but it still happens.
About Credit Counseling Companies
Credit counseling companies differ from most debt relief companies because they actually provide counseling. They generally abide by all the debt settlement regulations and do not charge astronomical fees for their services, although small fees are typically charged. Credit counseling companies have programs available to distribute payments amongst various creditors just as debt relief companies do, but if it looks like a person wouldn’t benefit from such a service, they generally don’t recommend it. Even though there may be some credit counseling scams, there are far more legitimate companies of this nature in existence than there are legitimate debt relief companies.
The bottom line is that any plan to help manage and reduce debt should be workable and realistic. Any company, regardless of whether or not it’s a credit counseling or debt relief agency, should not be trusted if they are making promises that seem too good to be true. The Better Business Bureau is a great place to start if there are any doubts about a specific company.
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