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Avoiding Debt Relief Scams
Money SmartsAugust 16, 2021
Debt can be overwhelming, so it’s understandable that, if you come across someone offering to get rid of your debt fast, you may be tempted to accept. However, be careful; if an offer sounds too good to be true, it probably is. GLCU housing counselors are here to help you avoid debt relief scams.
Beware of promises.
Some debt relief or credit repair companies will advertise that they can fix your credit, negotiate settlements, or help you get out of foreclosure, guaranteed. While this sounds good on the surface, it is always up to the creditor or servicer alone as to what terms they’ll accept. Reputable companies recognize that they do not have the final say over an outcome, and they will state in their contract or disclosures that they cannot guarantee any outcome.
Watch out for upfront or hidden fees.
According to the Federal Trade Commission, many dishonest debt relief companies will charge massive upfront fees before working with consumers. Some scammers don’t even do any work for the client. Given that you can correct credit report errors and negotiate settlements with creditors for free, any company charging steep prices should raise alarms. If a debt relief company is hesitant to disclose its fees or changes the amount it charges, it’s likely a scam.
According to Investopedia, the cost of hiring a credit repair company is anywhere between $19 and $149 per month, depending on the company and its services. There may also be a setup fee, according to Nerdwallet. If you are already struggling with debt or behind on payments, a paid service can hurt more than it helps, especially considering that disputing items on your credit report can take months.
Get help from trustworthy sources. You don’t have to handle credit or debt challenges alone. Nonprofits accredited by the National Foundation for Credit Counseling are required to provide individualized counseling at a clearly stated, reasonable price. The HUD-certified housing counselors at GLCU can help you handle issues related to credit and debt at no cost.
Know where to report if you’ve been scammed. If you have been scammed, don’t despair. You can report the details to the FTC so that they can identify patterns and stop future scams. Your state’s Attorney General may also help facilitate mediation and solve disputes, as well as keeping detailed records.
Debt relief scams are, unfortunately, common, but by knowing some common scammer tactics and where you can go for help, you can help protect yourself. GLCU counselors are here to help with any credit or debt issue. Give us a call at 224-252-2620 or an email at housing at glcu dot org.