As someone currently facing increasingly overwhelming credit card debt, you may be weighing your options and trying to figure out the best way to get your finances back in order. Credit card debt can prove increasingly problematic because of the monthly interest charges associated with it, which make it compound, and you may be feeling more and more desperate as creditors come looking for what you owe them.
Once your debt becomes too much to handle on your own, you may start considering options such as filing for bankruptcy, negotiating with your creditors or utilizing the services of a debt settlement agency. The third option can prove particularly risky, however, as some companies that offer debt settlement programs are unethical in their practices, potentially placing you even further into debt.
Signs of debt settlement scams
Currently, many companies offering debt settlement services are for-profit entities, meaning their primary goal is typically to boost their own profits. They may tell you that they can settle your debts for an amount much lower than what you owe, but they may not be truthful in telling you so, and your creditors have no obligation to go along with the payment plan the debt settlement company proposes. So, before you sign on to work with a particular debt settlement agency, look for the following red flags, all of which could signal a debt settlement scam that may cause you more harm than good.
- Guarantees: As mentioned, creditors do not have to comply with a debt settlement agency’s proposed payback plan, so if a debt settlement agency guarantees they can eliminate your debts for a certain amount, think twice before signing on with them.
- Directions to cease communications with creditors: A company that tells you to stop all communications with your creditors without warning you of the additional trouble doing so can cause is another one you probably do not want to work with. Ceasing all communications can lead to late fees and other charges from your creditors, so you may be remiss to halt communications with creditors, even if a debt settlement agency advises you to do so.
Do not let debt settlement agencies prey on your desperation. Most Americans will find that they have other, safer, options available to them.