How to Distinguish Between Legitimate Debt Relief & a Scam

By bogotapost January 16, 2020
Photo: Creative commons

It can be hard to know where to turn when you’re in debt, even if you know you need some help figuring out how to pay back what you owe. Debt settlement is one strategy that has helped people zero out billions of dollars in collective debt for less. But the first step is always making sure you only work with a legitimate debt relief firm — otherwise you might find yourself even deeper in the hole.

Here’s more on how to distinguish between legitimate debt relief and a scam.

Giveaway #1: Asking for Fees Up Front

Perhaps the brightest red flag when it comes to illegitimate debt relief offers is a request for fees before any resolution agreements have been reached with creditors. The Federal Trade Commission (FTC) actually amended its Telemarketing Sales Rule to prohibit up-front and front-loaded fees. While it’s perfectly legal to charge a fee for performing the service of settling a debt, legitimate companies will only do so after a resolution has been reached on an account.

It’s only natural to wonder, “Is debt relief legit?” while researching your options. For any company that charges a fee up front, the answer is a resounding no. because they’re in direct violation of the FTC’s ruling.

Giveaway #2: Guaranteeing Results

Be wary of any company that guarantees certain results. Here are a couple forms these tricky guarantees might take:

  • We’ll eliminate your debt!
  • We’ll reduce your debt by X amount.
  • We’ll eliminate your debt within X time period.

While companies may be able to turn to historical data to give you a general idea of what the program typically entails, there’s no program on earth that can guarantee results before undergoing the process.

This uncertainty is because it’s impossible to know how creditors will respond during negotiations. While many consumers have been able to settle with creditors for a percentage of their debts’ original balances, there’s never a 100-percent guarantee that creditors will be willing to play ball. There are too many factors at hand to know what the outcome will be beforehand. So, a company telling you they can definitely get rid of your debt, reduce it by a certain amount or take care of it within a given timeframe is simply trying to entice you to sign up — but their guarantees are unfortunately not credible.

Giveaway #3: Asking You to Provide Info Before They Do

You should always head into debt settlement confidently, feeling like you’ve received enough information to make an informed choice about whether it’s the right strategy for you and what you can expect from the program you choose. It’s smart to ask a lot of questions up front so you know exactly what to expect if you do choose to move forward.

Beware any business that asks you to provide personal and financial information before they provide information about their program to you. Legitimate debt relief companies will have no problem being transparent about their services, possible risks involved and the outcomes they’ve been able to achieve for others.

Giveaway #4: Lots of Negative Reviews

Last, but certainly not least important, you’ll want to see what other consumers have said about their experiences with a given company. While every debt relief organization under the sun will have some negative reviews, legitimate ones will always have more positive reviews than negative. Scope out various ratings to ensure lots of people have had firsthand experience with a given company and that they encountered transparency along the way.

These four signs will help you separate the scammers from the reputable debt relief companies out there.