Many people feel desperate when their finances start to spiral out of control, and if you are among them, you may be looking for relief in any form. Be wary of those who may try to prey on your situation, though, and learn how to recognize potential debt settlement scams.
The majority of debt settlement companies are operating for a profit. So, it is reasonable to assume their priority is making money for themselves, rather than helping you make your finances more manageable. When you find yourself deeply in debt, you may have other, safer options available to you, so explore those before agreeing to work with any company that does any of the following.
If a debt settlement company tells you it has the capacity to eliminate your debt in exchange for an amount that sounds too good to be true, think twice. Your creditors have no obligation to go along with the debt settlement company’s proposed terms. Any company that makes assurances otherwise may be operating under unethical means.
Charges upfront fees
When you work with a debt settlement agency, the agency gets its cut when your debt settles, and not before. If a debt settlement agency asks for upfront fees, consider this a red flag and look into alternative ways to make your debt more manageable.
Tells you to halt all communications with creditors
In some cases, failing to pay bills and avoiding all communications from creditors may lead to additional fines or fees. A debt settlement company should not ask you to cease all communications and payments to creditors unless it outlines the potential repercussions associated with doing so.