Category Archives: Debt Relief Scams

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Should I go to a credit counselor, or to a debt consolidation service?

It all depends on your exact circumstances. Many people can be helped by credit counseling, but be careful who you go to.. Your church or neighborhood group may also have a good credit counseling program.

In my opinion, most people will not be helped by a debt consolidation service. In fact, there are many people who have paid for debt consolidation services, only to end up owing a lot more money than they did when they started. You have probably seen a lot of commercials advertising “nonprofit” services, promising to negotiate your debts with all of your creditors and to solve all of your problems. Many of those “nonprofit” services were created by credit card companies and finance companies, and most of their counselors are not properly trained. None of them can offer the absolute results that federal bankruptcy law does. On top of that, there are certain creditors who absolutely refuse to work with consolidation services. They don’t have that option in bankruptcy, where creditors have to follow the same rules as everyone else.

Firebaugh & Andrews can help you figure out what is the best course of action to take, Call us for your free consultation. 734-722-2999

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How To Avoid Debt Relief Scams

If you’re having a problem with debt, sit back and relax as there are ways to achieve debt relief. However, it pays to be careful because the Internet is home to many debt relief scams. If you were to get caught up in one of these, you could lose hundreds of dollars and end up in worse financial shape.

What is a debt relief scam?

The simple answer to this question is that a debt relief scam is where a company makes promises that it does not keep. However, these scams are much more complicated than this. They generally start when a debt relief company contacts you and claims it can get your interest rates reduced to help you get out of debt in no time at all. Some of these companies even say they can get your credit card debts eliminated. Many of them also claim to be nonprofits. The person who contacts you will probably sound very professional and very reassuring.

Upfront fees

The first sign that the company may be a debt relief scam artist is if it requires an upfront fee. Legitimate debt relief companies charge nothing until they’ve settled your debts and you’ve signed off on a payment plan.

Legitimate debt relief companies are known by the company they keep

If you are contacted by a debt relief company, the first thing you should do is go to its website. Legitimate debt relief companies are members of the Better Business Bureau and probably the US Chamber of Commerce. They also usually belong to associations such as the American Fair Credit Council and display the BSI Certificate of Registration, showing that its services are in accordance with all the requirements of the Best Practices For Accredited AFCC Members Checklist.

How legitimate debt relief companies operate

A legitimate debt relief company charges no upfront fees (as noted above) and won’t make promises that it can get you out of debt in just a few months. It will require you to provide documentation of exactly how much you owe and to which creditors. You will be required to provide copies of your statements showing how long it has been since you’ve made payments to your creditors.. You will be given a contract to review or even take to your attorney that will spell out exactly what the debt relief company will do for you and how much it charges for its services. Nothing more will happen until you sign and return the contract.

You will begin paying the company

Once you have signed off on your contract, you will begin making payments to the debt settlement company. If it’s legitimate, it will deposit the money in a trust account that only you can manage. The debt settlement company will then start contacting your creditors and offer to settle your debts, probably for about half of what you owe. When all your creditors have agreed to the settlements proposed by the debt relief company, the money you have put in trust will be used to pay them off. You will have an affordable payment plan that should enable you to become debt free in 24 to 48 months.

If it seems too good to be true, it probably is

Don’t fall for promises from debt relief companies that seem to be just “too good to be true.