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.

Identity theft is a crime that victimizes a person twice; once when the crime is discovered and again when the victim tries to repair the damage that was done in their name.  If the person is lucky, the identity theft is discovered as soon as the person attempts to use their identity illegally.  The unlucky victims do not discover that someone has stolen their identity until they are turned down when they attempt to get credit or they view their credit history and find accounts that they had not opened.

Many identity thieves are good at hiding their tracks and you would never know that your identity had been stolen.  The accounts that are opened using your name and social security number are often diverted to dummy addresses so the individual would not even know that the accounts had gone into default.  If the phone number used for the account is a fictional number as well, the victim will not receive any of the collection calls for the account either.

As if this was not devastating enough, the victim will often have a hard time convincing the creditor that the account was not actually theirs.  If the identity theft is discovered quickly enough, a person can limit the damage fairly quickly by calling the creditor, canceling the account, and explaining the situation to the customer service representative.  In some cases, the individual will have to fill out a statement verifying that they were the victim of identity theft and allow the prosecution of whoever is found to be using their name and credit without their permission.

If the identity theft is not discovered quickly, then the victim will face a whole host of new problems.  Many creditors will only allow a person to dispute a charge within a certain period of time so if the theft is not discovered within that time limit, the victim may be on the hook for the charges.  Some other creditors require that the person prove that it was not them who opened the account and, if the company has already sold the debt to a collection agency, the victim may be receiving collection calls for a long time afterward.

Being proactive about limiting your risk for identity theft is the best way to ensure that you will not be a victim.  Check your credit report regularly to be sure that no accounts have been opened in your name that you are unaware of and keep your social security number secure so that identity thieves will not have it to open any credit accounts.  If there have been any unauthorized or suspicious activities on your credit report, report them immediately to limit the damage done to your credit and your life.

If you perform a simple Google search for debt reduction, you’ll find over three million results of companies which claim to help to eliminate and reduce your debt dramatically. This really shouldn’t be all that surprising considering how much consumer credit people are making use of in this modern era. Credit cards, home equity loans, title loans, payday loans, 90 days same as cash, auto loans, you name it; people are borrowing money through it. A lot of people are up to their eyeballs in debt, and want out. There are a number of companies which prey upon consumers that will claim to eliminate your debt without all of the work, however they’re scams, and you should avoid them.

One of the major scams in this field is the “debt elimination letter” scam, they’re all scams, stay far away. The basic premise of this scam is that for a rather large fee, the “debt elimination agency” will send you a letter which you can show your creditors to get your debts waived. A lot of people would love this type of letter, but they have no legal basis in the real world. Most of the time if you try to use one of these letters the company will just laugh at you. Instead, actually use that money to pay down some of the debt instead. A lot of these agencies falsely claim that some of the fees credit card companies charge are illegal so the entire debt should be void. Sometimes these letters are called “redemption certificates and “bondage for discharge of debt.”

There’s also the “illegality of the credit card” scam. It’s similar to the debt elimination letter scam, but instead they claim that the entire credit card system is illegal, and since the system is illegal they cannot legally charge you for your debt. They will often charge thousands of dollars for such letters, stay far away from them.

Finally, there’s the “new credit identity” scam. In this scam, companies will offer to create a how new social security identity for you so that you don’t have to live with your past financial sins, and get a clean slate for your credit record. It’s actually very illegal to do this and will probably get you in trouble with the feds.

If you are in debt, there’s no magic formula. If you absolutely think you have to go to a debt consolidation company or a debt reduction company, go to Consumer Credit Counseling Services, and nobody else. Chances are you don’t even need CCCS, instead just work very hard and work to eliminate your debt quickly and systematically. Take extra jobs, cut down on your living expenses; that’s the only way to do it.