Like many other individuals, if you are drowning under the sea of outstanding debt and looking for a way to come out of it, it is advisable to enroll into a debt relief program, like debt consolidation and debt settlement. When you enroll into a debt consolidation program, a consolidation company negotiates with your creditors to reduce the interest rate on each debt. On the other hand, when you enroll into a debt settlement program, a settlement firm negotiates with creditors to reduce the pay-off amount. However, no matter whichever program you choose, you must be aware of the debt settlement scams. There are many companies who charge high front fees making alluring promises to settle the debt by up to 50 to 70 percent, but ultimately do nothing. To avoid such situation, you must be careful while hiring a settlement or consolidation company.
Let us here discuss how to identify a debt settlement fraud.
If a settlement company calls you too many times and asks you for services, ask for their contact information. If the company does not want to disclose its name and address, and insists you to enroll into their program, then you must understand it is a fraud. Legitimate companies will never contact you over phone and beg you to hire their services.
If you are thinking to hire the services of a debt settlement company, contact the Better Business Bureau to check its credential. The Better Business Bureau can tell you if there has been any complaint against the company you are considering. To know more about the company, you can also approach your state attorney general’s office that can provide with information about the reputation and experience of the firm.
Before signing up for a settlement company, ensure whether or not the company is a member of the Association of Settlement Companies. This association is a trade group that promotes good industry practices. If the company claims to be a member of the association, check the association’s website to ensure its membership.
Ask the company about the effects of debt settlement on credit ratings. If the company is legitimate, it will be honest about the fact that debt settlement affects the credit rating negatively. But if the company is questionable, it will assure you that no negative effect will occur.
Before you start working with a company, make sure you get everything in writing. Fraudulent firms will never put their terms in writing in a legally binding document, and will ask for hefty fees for services. Fraudulent companies will never cooperate with you and entertain your doubts and queries; they will only hurry you for signing on the paper work and enroll in their program.
In conclusion, consider the above mentioned tips in order identify fraudulent debt settlement companies.