Discover Debt Freedom!

One night as you are looking over the endless bills that seem to arrive at your home, a snippet of sound from the television catches your ear. A commercial for a debt relief company is on the television, claiming that they can reduce or eliminate your debt for pennies on the dollar. As a debt strapped homeowner, the offer seems like a life line out of the problems that have been plaguing you and almost seems too good to be true…

For many homeowners, the reality of many debt relief companies is that they are too good to be true. Individuals that use the worst of these companies find that they have paid hundreds, even thousands, of dollars in fees for the company to do absolutely nothing to help them. Many of these companies make extravagant promises that would be extremely difficult, if not impossible, for them to keep, but they are convincing enough that thousands of individuals fall for their tricks every year.

Common Debt Relief Scams

Debt Settlement Programs – There are many debt relief companies that will claim that they can negotiate with your creditors to allow you to pay off all of your debts with one lump sum payment – often as little as 30% of the balance of all of the accounts. This is virtually impossible to do and many individuals find that any payments they make to the company miraculously disappear while the total balance on all of their accounts stays the same.

Non-Profit For-Profit Companies – Some for-profit debt relief companies claim to be a non-profit company to lure their customers into a false sense of security about the company and their mission. The companies that are caught using this practice are prosecuted under the law.

Misleading Charges – Individuals that have had dealings with some of the worst offenders in the debt relief industry have found that money paid towards lowering the balances on their debt accounts have instead been applied to numerous fees that the company has levied against them, often without their knowledge. A common example of this is the $300 referral fee that some of these companies charge to refer you to some other company that can supposedly help you better than they can.

Lower Interest Rate Promises – A number of misleading debt relief companies will offer to lower the interest rate on all of your debt accounts by contacting the lender and renegotiating the rate – after you have paid $500 or more in fees for the work of course. The companies will then disclose that your creditors will not lower the interest rates on the monies you owe them and the debt relief company keeps your fee for their inconvenience.

Complaints against debt relief companies are becoming more numerous each year and the Federal Trade Commission has sued more than a dozen of these companies in the last several years because of misleading business practices. Consumers need to be aware that there is no magic remedy for debt relief and if the claims of a debt relief company seem too good to be true, then there is a good chance that the claims are part of a scam. There are numerous ways for an individual to get out of debt without declaring bankruptcy, but they all require personal responsibility, changing the individual’s spending habits, and time.