According to the Federal Trade Commission, debt settlement scams prey on thousands of people every year. These debt-laden consumers are scammed out of more than a thousand dollars each in up-front fees by unscrupulous companies promising to make them debt free. The marketing hype makes these debt settlement programs sound like the answer to their prayers only to find out too late that they instead are thrust deeper into the pit of financial ruin.
It is easy to lose valuable amounts of money especially when you don’t know what you are getting into. Do not be carried away with empty promises and generalities that most scammers are prone to doing. Here are some of the tips you would do well to remember to avoid ending up being ripped off:
1. Understand how debt settlement works.
Scammers count on your ignorance so that they can lure you in with their empty promises. However, when you know how a thing works, you cannot be convinced otherwise. Educate yourself as much as possible, understand the process and identify what works and what doesn’t. With this knowledge, you can easily make a detour away from victim baiting debt settlement companies.
2. Read the small print and understand what you are signing up for.
I know you want your debt settled in the soonest possible time. However, the few seconds it took you to sign a contract with a possible debt settlement scammer will not speed up the process. In other words, when it comes to contracts, speed reading is not a good idea. Read it at least twice. If there’s something fishy about it, consult a lawyer or ask someone from the company for clarification. Don’t just assume that it’s fine.
3. Ask for the details
Scammers can easily spin a tale of generalities but will have a hard time coming up with details and specifics since they don’t have anything to show for it. Again, ask them how they are going to go about settling your debt, what are the steps they are going to take, what can they accomplish within a particular period, where will your up-front fees be applied, how will they deal with your creditors, will you be incurring late payment charges and the like.
4. Do a background check
The Better Business Bureau is a good place to start. The Bureau has an extensive list of companies reported for scams and other unfair dealings with consumers. Also, learning from current and previous clients of the company can give you a good idea whether or not you are stepping into one of the debt settlement scams.