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How to recognize debt settlement scams

If you, like so many others, have found that overwhelming debt has become a fixture in your life, you may be exploring your options and trying to figure out how to get your finances back under your control. People in your circumstances often feel hopeless, but the good news is, there are a variety of options that may meet your needs. Regrettably, however, some companies tend to prey on those struggling with seemingly insurmountable debt, and they do not always engage in ethical tactics when doing so.

For example, if you are facing massive amounts of, say, credit card debt, you may start receiving offers from so-called debt settlement agencies that attest that they can resolve your debts for only a small fraction of what you owe. Sounds great, right? Keep in mind, however, that, as with many things in life, if something seems too good to be true, it just well might be.

Why you should be wary

Typically, debt settlement companies will tell you they can negotiate with your creditors and argue down the amount of debt you owe. The problem is, however, your creditors have absolutely no obligation to follow along with the debt settlement agency’s proposal, so what your debt settlement representative tells you may be far from the truth. A debt settlement company may also avoid telling you about other potential risks associated with the process, which might include your credit taking a serious hit, debt collectors continuing to blow you up, and so on.

Spotting potential scams

While debt settlement agencies may prey on your stress and desire for a fast solution, there are key signs to be on alert for that should serve as red flags. More specifically, think twice before signing on with a debt settlement company that charges upfront fees, or one that instructs you to cease all communications with your creditors without explaining the potential risks involved in doing so. Similarly, avoid signing on with any company that makes guarantees about eliminating your debt, as again, your creditors have no obligation whatsoever to comply.

Despite what debt settlement companies tell you, signing on with one is rarely your best option. Consider alternatives before signing on with a company with unethical intentions.

 

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