![]() ![]() The company advises you to cut off communication with creditors.The company guarantees it can eliminate your debt or reduce it by a particular amount in a set period of time.A debt relief company asks for fees up front, before it settles any debts.The commission encourages consumers to carefully weigh a range of options when looking for ways to dig out of debt. Some firms don’t fully explain the potential consequences, according to the FTC. It might - but creditors are under no obligation to settle rather than, say, sue, and in the meantime you could accrue interest and penalties and damage your credit score. Many firms instruct clients to stop paying their debts, on the premise that this will compel creditors to negotiate a reduction. Amid the economic anxiety caused by the coronavirus pandemic, consumers have been targeted by scam robocalls offering student loan replayment help and other debt assistance, the Federal Communications Commission reports.Įven with legit companies, debt settlement carries considerable risk. Student loan debt, which has ballooned to $1.6 trillion and is a growing burden for older Americans, is an especially ripe market for fraudsters, who collect advance and ongoing fees with bogus promises to enroll customers in government debt-forgiveness programs. The FTC received 20,590 consumer complaints related to credit and debt conseling in 2021, more than in the prior two years combined. Some take your money and run others will string you along, collecting payments and making promises while you fall farther behind on delinquent accounts. (Legitimate debt relief firms do charge for their services but can collect only when they get results.) That’s illegal, and a big red flag that your would-be debt savior isn’t on the up-and-up. Scammers, on the other hand, offer sham “guarantees” to get you out of debt quickly and cleanly - and, crucially, “they ask you to pay them before they do anything for you,” says the Federal Trade Commission (FTC). You’ll be asked to stop making payments on your debt, as delinquent accounts are more often successful in settlement negotiations. When you work with a debt settlement company like Freedom Debt Relief, the company is attempting to settle the debt on your behalf. They can advise you on budgeting and money management, negotiate concessions with creditors or set you up with a plan to put away money each month to pay down your debts, usually over a period of years. Freedom Debt Relief review Summary of debt settlement services. ![]() There are reputable companies and organizations that can help you get out of the red. But proceed with care: Some debt relief offers are scams that will dig you in even deeper. When debt seems like a hole you’ll never climb out of, a phone call, email, website or ad promising to settle your liabilities for pennies on the dollar can be awfully tempting. ![]()
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