Debt Relief

Consumer Alert: Beware of Debt Relief Scams

Many people face a financial crisis at one point in their lives, whether it’s due to an illness, loss of a job, or overspending. There are several different ways to seek debt relief assistance. Some companies promise debt relief in exchange for voluntary contributions – fees. Others pressure clients into paying a certain amount of money for a debt relief service in exchange for guaranteed results. Some companies promise debt relief and then pressure clients to stop communicating with their creditors. These companies may tell their clients to stop making payments, cease communication with their creditors, or even stop lawsuits and debt collection calls.

While debt settlement companies may offer temporary relief, scams are common. If you choose a scam, you could be putting yourself in a worse financial position. A debt relief service can work with your creditors to negotiate a payment plan that will make it easier for you to pay your bills. However, it is important to remember that these companies are in business for profit. There are some legitimate debt relief companies, which are also referred to as debt settlement and adjusting companies.

Some companies may also charge high fees, including hidden fees. Consumers should research a debt relief service before hiring them. The Federal Trade Commission advises consumers to avoid debt relief companies that demand high fees or charge hidden fees. To make sure a debt relief service is legitimate, they can be found on the Internet. Check for certifications and qualifications from the Financial Counseling Association of America (FCA).

Most debt relief companies follow a short-term strategy. This strategy often involves selecting the smallest debt settlement opportunity possible, which allows them to charge fees sooner. It also gives the customer a false impression of competence, and a higher debt burden down the road. Moreover, short-term wins can only result in higher payments. These are just some of the risks involved. Make sure you choose a legitimate company based on its accreditation and track record.

Another type of debt relief service involves debt management. It involves a debt management plan – similar to debt consolidation, but without consolidating your debts – in which you pay your creditors less money each month. The debt management plan involves monthly payments into a designated account. The debt relief company will then use this money to make payments to creditors on your behalf. These payments will be made for three to five years, depending on the terms of the debt management plan. If you’re paying through a debt management company, a debt counseling service may help you understand your financial situation and determine what steps to take to become financially stable.

While debt relief services can be helpful, they aren’t for everyone. If you are actively adding to your debt, you’re unlikely to be a good candidate for a debt relief program. This indicates that your spending problem is deeper than merely your financial situation. A debt relief program won’t be successful unless you address this problem first. Most debt relief companies require their users to stop using credit cards, lines of credit, and loans before beginning any debt relief process. This will help prevent the problem from compounding.

While some companies offer a free consultation, others require a deposit. Accredited Debt Relief is one company that has a simple process. Once you sign up with a debt settlement firm, your consultant will calculate the monthly payment you need to make on the debt. They will also open an escrow account for you. Once you have enough money in the escrow account, the company will begin negotiations. This process can help you become debt-free in as little as 12 months.

Some debt relief companies also offer a number of different tax relief programs. If you qualify, you can schedule a free consultation. To check if you qualify for the program, you can visit the Community Tax website. You’ll be asked to enter the amount of your debt and the type of taxes you owe. Once the account balance reaches a specified level, the debt settlement company will negotiate with your creditors to settle the remaining balance.

Citizens Debt Relief is another company offering debt settlement services. This New York-based company works with clients to reduce or eliminate their debt. The firm has an A+ rating with the Better Business Bureau and has earned accreditation from the American Fair Credit Council. The company’s debt relief program is customizable and highly effective. Customers can get their debts settled with a low monthly payment or even completely eliminated. It is easy to sign up and get back on track after a year or two.