Avoiding Debt Relief Scams

Be wary of individuals or entities preying on hapless and unsuspecting debtors so as to avoid further financial difficulties.

Debt relief scams have proliferated recently and many of these companies are engaging in illegal practices. You have to be vigilant in watching out for indications that companies offering credit solutions are out to deceive unsuspecting consumers. These companies may claim to know of techniques in eliminating debt or give you very low interest rates. Most of these con artists are sweet talkers and sound very convincing. In reality, said scammers are simply waiting for you to trust them. One of the first signs that the debt relief company is actually a scam is when it demands an upfront payment. Legitimate facilities do not charge anything until you have paid off your debts and completed a payment plan.

Operations of Legal Debt Consolidation Entities

The genuine debt assistance company is usually accredited by the Better Business Bureau or United States Chamber of Commerce. You can always check the background of these entities through their websites. Legitimate organizations are members of the American Fair Credit Council with corresponding registration certificates.

The true debt consolidation company does not commit that it can get rid of your debt within a short time. Initially, it will compel you to present documents showing your creditors and the amount of money that you owe these people or facilities. Likewise, you have to show proof of your payments. You will be given a contract for evaluation after this process. It will lay down an explanation of its services together with the corresponding fees. A formal engagement will take place only after you sign the agreement.

Working with Legitimate Institutions

You can start making regular payments after your contract with the debt relief company is formalized. The funds should be deposited in a trust account that only you can handle. By this time, your debt consolidator will start getting in touch with your creditors and propose to clear up your monetary obligations. This can be half of your current total liabilities. Once an agreement is forged, the finances that you have kept in the trust account will be used in paying off debt. Your payment plan will allow you to be free from debt possibly within one to two years.

Avoiding Scams

This is a tall order that calls for considerable vigilance so you manage to steer clear of rip-offs such as debt settlement scams. Debt repayment companies are supposed to negotiate with lenders in bringing down the total amount that you owe these people. What most debtors are not aware of is that valid settlement of accountabilities can bring about negative implications on your credit ratings and tax repercussions. Some companies begin asking for money which should be paid to the creditor but end up in their hands.

There are also credit repair scams wherein a company offers credit card help and promise to remove negative items in your credit report. This is not possible since nobody can remove this negative mark. The most that these firms can do is to act as liaison between consumers and the three credit reporting firms. The truth is you can dispute any inaccuracies in your credit report without having to pay someone.