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How To Avoid Scams When Seeking Debt Relief

This is a guest post from Kevin @ DebtEye.  Kevin is the Co-Founder of DebtEye, which helps consumers find the best option when it comes to debt relief. 

Being in debt is stressful and can wear you down.  It can keep you up at night while you’re trying to figure out a way to pay off the debt.  Over the past few years, debt relief companies have been targeting vulnerable consumers who are desperately trying to figure out a way to get out of debt.  You’re an easy target because you would do anything to avoid bankruptcy.

It’s important for anyone who is seeking help from a third party to tread with caution before they pull the trigger.  Signing up with the wrong company can leave you deeper in the hole from where you first started.  Most of these debt relief companies advertise on the TV & Radio which can be heard on late night infomercials.  These companies have deceptive marketing tactics to get you in the door by sugar coating the program.  Here are 4 things to watch out for when seeking help from a third party company

  1. Who are you really talking to:  When you speak to a representative, ask yourself if you’re speaking with a salesperson or a certified credit counselor.  Most debt settlement companies you speak with are sales people who know NOTHING about the debt relief space except debt settlement itself.  The problem with this is that they are specifically trained to have every rebuttal to sway you from other programs.  Their goals aren’t aligned with the consumer’s best interest. 
  2. Transparency:  When speaking with a company, make sure they are completely transparent with the fees.  Ask them to provide with you with the total amount of fees for the program.  Most debt settlement companies will charge you anywhere from 15-18% of your debt amount, or 25-30% of what they save you.  You need to be fully aware how much of your payment every month is going toward a designated escrow account and how much are going toward their fees.
  3. Refund Policy:  What if you decide to file bankruptcy halfway through the program?  What if you have an unforeseen emergency situation where you need to access your funds?  Be sure that the debt relief company has a 100% money back guarantee for services they have not performed.  On top of that, any funds in your escrow account is YOUR money and you should have access to it 24/7.
  4. How are they selling the program:  Anything that sounds too good to be true probably is.  This should definitely raise a red flag.  Debt settlement isn’t the most glamorous program out there.  This type of program is not right for everyone.  There are a lot of downsides to the program, and if the company is sugar coating the program, definitely be cautious!  One example might be, “Creditors don’t like to sue you because they’d rather work out an arrangement with us instead of spending money in courts.”  If you call a debt relief company, I guarantee you that you will hear this statement 80% of the time!

At the end of the day, you should do your due diligence and use your best judgment.  The best route to go is to do your own research online to figure out what the best program is.  There is no “one size fits all” in the debt relief world.

CFM comment:  I am away in Honduras on a mission trip so don’t be offended if I don’t quickly respond to your comments.  I will be gone through the 30th and internet access will be incredibly limited.  Thanks to Kevin for helping me maintain my posting schedule while I am away.

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Be the first to comment - What do you think?  Posted by Cash Flow Mantra - October 21, 2011 at 11:00 am

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