A lot of Americans are now swimming in debt. Making monthly payments, settling late fees, talking to debt collectors while having the fear of repossession or bankruptcy in your head – this is a lot to take. With how finances affect a person’s life, some people are simply desperate to climb out of debt. Sometimes, this desperation drives people into bad choices and makes them fall victim to scams. This happens a lot with debt relief.
Debt relief offers flood your mailboxes and they’re all over the internet. These offers promise to lower your monthly payments, reduce interests and render you debt-free. Does it sound too good to be true? That’s because it is. Many times, con artists and scammers entice people with the promise of debt relief and financial freedom. And because some people truly want to get out of debt, they fall easily.
First of all, debt relief cannot be a magical cure. In reality, debt relief can happen in two ways. It can happen when your creditor forgives your debt, either by significantly chopping off a huge amount from your debt or by completely writing off the entire debt. Another way that debt relief can happen is when you creditor agrees to stop charging interest on your debt. This way, your debt would not continue to grow over time. Sometimes, creditor can opt to just reduce interest rates.
When a company offers to give you debt relief, they are offering to contact your creditors and negotiate with them. This means that you no longer have to haggle with your creditor. However, the problem is that these companies immediately give you an estimate. Some immediately say that they can lower your fees by about half.
They will ask you to give that reduced payment to them. This is all happening even though the company hasn’t contacted your creditor. When the creditor refuses to negotiate for a lower payment, you’re in trouble. You’ve already sent the debt relief companies some money and yet your creditor still wants you to pay. When this happens, you end up using more money than you would have if you just paid the creditor yourself.
Another problem is that debt relief companies don’t advertise their processing fees. Normally, they will start contacting you and along the way, they’ll suddenly inform you that they have to charge you a couple hundred dollars in order to get the process going.
The main thing to remember is that you can’t fall for a sales pitch. You can’t trust companies simply because they promised debt relief. Do your homework. Find out more about the debt relief company. Talk to finance experts and ask about your options for eliminating or managing your debt.
If you jump into a debt relief program without adequate research, you may end up in a far worse situation. If you feel that you were cheated or scammed by a debt relief company, report their behavior to the Federal Trade Commission.