When you come across an offer of debt settlement or debt reduction which is too good to be true, then it’s most probably a scam. Debt settlement is not the right choice for everyone and there are some downsides to it. If a debt settlement company claims that you can pay off your dues with their help by paying pennies on the dollar and can’t clarify how this can happen, then it’s most likely that you’re falling prey to a scam company. The most familiar scams are immediate signup, extensive settlement programs and half truths.
Given below are some warning signals that would help you identify and avoid a scam debt reduction company:
Half truths or incorrect information about the settlement program are red flags of a scam company. The company simply supplies the information that they feel you wish to hear from them to register for the program. Half truths or misinformation might include misrepresentation regarding certain portions of the program or simply not informing you what you must understand regarding any debt settlement program. You have the right as a consumer to know the advantages and downsides of a program if you want to make a knowledgeable decision.
If a settlement offer is extended to you that involves a term of 4, 5 or 6 years, it might seem an attractive offer to you on its face since you will need to make a small monthly payment into the trust account. However, it would essentially take you a lot of time to pay off your creditors and this would result in filing of lawsuits against you by your creditors.
There are some exemptions to this supposed scam if you simply want to use the small monthly payment for a limited period and subsequently start paying extra to speed up the program to below 3 years. This is not always a good decision but it is advisable to reduce the payment at the start so that you can get back on track. However, they should clarify this to you that you have to pay extra to speed it up afterwards.
This is one more familiar type of debt settlement scam. You talk to someone on the telephone and they tell you that you’re enrolled without faxing any documents or any eligibility procedure. They would also solicit that you make the initial payment instantly through your credit card. This is despite the fact that your credit card debt has forced you to resort to a debt settlement company. You should be cautious about any company that is ready to sign you up without knowing your creditor details.
Knowing the warning signals of a scam settlement company would help you make the right decision.
Article from a debtcc member
