Many people who are looking to get out of debt are searching for any way out of their stressful situation. They’re searching for hope, and sometimes when people are desperate, they’re willing to believe things that are too good to be true and fall into Debt Settlement Scams.

In this article, we’re going to teach you about two scams that people are falling for every day as they try to get out of debt, and it’s costing them thousands. These scams are known as debt relief and debt settlement.

On the surface, they seem legitimate, but if you look just a little more closely the cracks start to show. Here at Reliant Management Solutions, we want to equip you to avoid these scams so that you don’t fall even deeper into debt and lose your hard-earned money in the process.

Read on to educate and protect yourself (and see what the government officially says about debt relief and debt settlement).

Scam #1 – Debt Relief

According to official findings from the Federal Trade Commission (FTC) debt relief scams specifically target people who have a large amount of credit card debt. Once these targets are identified, the scammers contact them offering a glimmer of hope. The scammers promise their targets that they’ll negotiate and reduce the amount of money they owe to their debtors through a “debt relief” program.

The problem is that debt relief programs don’t exist. These scammers will make the “debt relief” deal sound very attractive to their targets, and no matter how much someone owes, they promise “debt forgiven in 3-6 months.” This is not possible, and you need to run away.

These despicable fraudsters prey on people’s emotions by dangling the possibility of a fresh start in front of them– but here’s the catch. They ask for large amounts of cash up-front, and then pretend to be working on your “case” for a month or two before eventually disappearing and not returning any attempts to contact them.

If anyone uses the term “debt relief” do not be tricked, and remember that if it sounds too good to be true, it probably is.

Scam #2 – Debt Settlement

Debt settlement seems like it could be an okay choice on the surface, but there are dangers to it. When a company claims that they are going to get you a “settlement” for your debt, what they’re really suggesting is that they can negotiate with your creditors to pay less than you owe to “square up” and be done with your debt.

The way they typically do this is to act as a middle-man between you and your creditor, and have you transfer money each month into an escrow-type account that they control. The idea is to have you pay enough money into this account to eventually pay off your debt with the lump sum you’ve accumulated.

So the question is this: if you don’t have enough money to pay your bills in the first place, how in the world are you going to afford paying money into this magical escrow account they’re providing you?

That’s the main issue. Debt settlement companies will tell you to stop paying your creditors, and use that money to build up the lump sum of your settlement.

If it sounds fishy or unethical, it’s because it is. Here are just some of the risks involved with debt settlement:

• You can get sued. Your debtors don’t have any actual connection to the settlement company. To them, you’re just not paying your bills.
• Your credit score will be damaged badly. Each time you don’t pay you get another ding on your credit report.
• Some of these programs are outright scams and would keep every penny you put in to “escrow”

One final thing. If we’re being honest, the reason that many people are in their current financial situation is that they aren’t disciplined with their finances.

The debt settlement companies know this and expect people to pay to build up the lump sum over the course of 3 years or more. Most people aren’t disciplined enough to do this, and stop making payments to the settlement company after just a month or two.

This results in two bad things: people lose their money, and are now worse off financially because the debt settlement company told them to stop paying their bills.

What is the Real, Safe Solution to avoid debt settlement scams?

Here at Reliant Management Solutions, we have a proven, ethical way of helping people get out of debt. You’ll have no chance of being sued, and you’ll stay in good standing with your debtors. Not only that, but for many of our clients, their credit scores improve in our program.

Every person’s situation is different, so the way to begin everything is with a free consultation. Give us a call today so we can see exactly where you’re at, and how we can help you.

Let’s talk today.

Sources
Debt relief and credit repair scams. Federal Trade Commission. (2019, August 22).
https://www.ftc.gov/news-events/media-resources/consumer-finance/debt-relief-credit-repair-scams