Always Be On The Lookout For Debt Relief Scams
During times of economic hardship, many families may find themselves needing help with their finances. There are a number of legitimate agencies that can guide them over these rough spots. Unfortunately for some of the more vulnerable and unsuspecting people, there are also many “companies” who run debt relief scams, looking to take advantage of someone else’s misery in order to make money. By promising to reduce personal debt while keeping creditors at bay, they perpetrate their debt relief scams on those who can least afford to lose any more money.
Some debt relief scams are outright fraudulent, taking hard earned money from unsuspecting people and never paying a dime to creditors and leaving the person with even less money and the creditors continuing to pursue them for payments. Scammers usually start by setting up a fake storefront or internet portal (that disappears almost as quickly as appeared). Names change almost weekly and the ones in charge do their best to remain anonymous.
Typically, debt relief scams will accept payments only in the form of cash or money order and usually refuse debit or credit cards due the ability to track payments to their ultimate destination. They will usually push to receive upfront payment in cash, pointing out that with the business they are in, dealing in currency allows them to cut costs as well as keep their service fees to a minimum.
Some Companies May Keep Half To “Cover Costs”
With some debt relief scams, creditors may be contacted and informed that they are working on your behalf and negotiate lower payments. You will have the benefit of making one payment to them and in turn they will send payments to your creditors. However, their service fees for mailing checks for you may be as high as 50 percent of your monthly payment.
While your debt is being reduced, debt relief scams are making the perpetrators richer by charging you as much as all of the combined creditors are receiving. For example, if you have 20 creditors and are paying the company $200 per month, the company is probably keeping $100 for itself while your creditors are receiving $10 each per month. Depending on the total debt amount, it can take much longer than you expected to pay off the outstanding balance and accrued interest.
Another of the big debt relief scams involves offering to sell you information about where to go for government grants for debt relief. If you take a look at sites for the U.S. government or state governments, you will see for yourself that there is no such thing as a free lunch from the government. There are no such things as free government grants to help with personal debt – there are grants available to the most needy, but there are strict criteria to qualify for a grant and most applications made are unsuccessful. What these companies are selling you is a monthly subscription for a CD or printed list, and a you to use the information to apply for grants that you most likely will not qualify to receive, or they may even be secondary scam asking you for payment in order to process the application. No matter how desperate you feel your situation is, always be aware that there are people out there who will exploit your vulnerability, so be mindful of debt relief scams should you ever be looking for financial assistance with your debt.
