Debt relief service scams target consumers with significant credit card debt by falsely promising to negotiate with their creditors to settle or otherwise reduce consumers' repayment obligations. These operations often charge cash-strapped consumers a large up-front fee, but then fail to help them settle or lower their debts – if they provide any service at all.
Key Ways to Spot a Debt Relief Scam
- They contact you first. If you receive an unsolicited call or contact from someone offering to help you eliminate your debt, be extra cautious. There's a good chance they're a scammer.
- They ask for fees upfront. This is the most obvious sign of a debt relief scam. If the person/company offers to help get rid of your debt but first you have to pay them a fee, they're probably lying to you. Cut off contact and file a complaint with the Federal Trade Commission.
If You Need Debt Relief Assistance
- Credit Counseling
- Credit counseling can help you create a debt management plan, which allows you lump all of your debts into a single monthly payment, often at a lower interest rate.
- Ask potential credit counselors exactly what they offer, whether they charge a fee for their services and how long it will take you to become debt free.
- Debt Consolidation.
- With debt consolidation, you take out a new loan that pays off your existing debts — thus consolidating them — and you make a single monthly payment. If you use debt consolidation before you begin to miss payments, it can help minimize damage to your credit score.
- Be cautious before choosing debt consolidation. You need to know whether there is an upfront fee, your interest rate, payment schedule and amount and when you'll be debt free. Avoid debt consolidation companies that make outrageous promises ("Low or no interest! Guaranteed loans!").
- Debt Settlement.
- Debt settlement means you stop paying your creditors altogether and instead, save the monthly payments you were making in a savings account. Once you have enough money in the account, the debt settlement company will contact the creditor and negotiate a lump sum payoff of your debt (often for a much lower amount).
- Be careful before using a debt settlement company. Your credit will decline and you may be faced with extreme collection efforts. Debt settlement companies often do not have lawyers available to assist you.
At PFCU we have certified Financial Coaches to work with you to understand your unique financial situation and provide solutions to support your specific needs. To set up an appointment today, please use Live Chat Support, email pfcuinfo@pfcu4me.com or call 844-517-3611.