Debt Relief Solutions and how to Avoid Scams
According to the Federal Reserve, 2012 U.S. consumer debt stood at nearly $2.6 trillion*. That's more than $7,800 of debt for every man, woman, and child in the United States. And although our debt picture has shown marked improvement despite the Great Recession - we're borrowing less and paying down more debt - many Americans are still struggling to make ends meet and are relying on credit cards to pay for everyday living expenses. So it's no wonder many consumers are looking to debt relief, or debt consolidation companies to help them pay off their bills and get back on track financially.
Many consumers feel like they're drowning in credit card debt and unable to keep up with their payments. But with so much information on debt management and consolidation available online, it can be tough to navigate the waters to find the right solution to your financial needs.
Unfortunately, many debt relief companies' promises of quick, easy bill consolidation or debt settlement are nothing more than scams; designed to make money for them, but ultimately putting consumers at risk of identity theft, fraud, and financial ruin. So it's essential to do your research if you're looking for legitimate debt relief companies that won't take advantage of you and your financial situation.
Take Steps to Find Legitimate Debt Relief Companies
It's not always easy to identify untrustworthy debt help companies, but there are several things you can do to protect yourself, your identity, and your wallet.
- Beware of any ads promising "quick" or "easy" fix. If you want to get out of debt the right way, realize that it will take time, discipline, and a fair amount of work on your part. Reputable debt management companies offer plans that are realistic in both monthly payment amounts and timelines. In other words, if you have a substantial amount of debt, be cautious about enrolling in any plan that promises to lift your debt burden in just weeks or months. In addition, a trustworthy company will not claim to do all the work for you; rather, it will work as your financial partner throughout the process.
- Consider the source. Internet advertising is the cheapest, quickest way for companies - legitimate or not - to get their messages to you. Which means just about anyone can afford an online ad. Legitimate debt relief companies will have much more "meat" behind their ads - including comprehensive websites dedicated to smart debt relief programs, listings with the Better Business Bureau, and a phone number clearly displayed.
- Determine how long the company has been in business. If it's less than a few years, consider looking elsewhere. The most trusted companies have a long, successful history of helping consumers with their financial needs.
- Ask for recommendations.There's a good chance you know someone who also needed information on how to get out of debt. Ask them about their experience - you may find a good company that will work as your partner in getting out of debt. Or they may help you avoid certain companies that they found to be less than honest. Customer feedback is an important indicator of a company's reliability, so look for companies that offer full disclosure of their services. One valuable resource is CareOne's online community forums, which allow consumers like you to post information about their experience with debt relief companies and what has worked best for them.
- Don't accept a one-size-fits-all solution. Companies trying to scam you will try to convince you that they have a magic formula for quick and easy debt resolution. But in reality, the only true way to get out of debt is to pay it down yourself or to partner with a company that will help you to pay off your bills. And in doing so, they'll offer multiple solutions, like debt management and debt reduction services such as debt settlement.
- Ask for details and read the fine print. The best companies will have no problem giving you the details of the plan(s) they recommend for you and your particular financial situation. If you're uncomfortable reading and understanding the paperwork yourself, consider having an attorney review the agreement before you sign. And never sign anything if you feel pressured to do so.
- Don't be duped into paying upfront fees. A good settlement company will not accept any payment or fee unless you achieve financial success on their program. Remember, the company should be an advocate for the customer, not the creditors.
Armed with this information, you're much more likely to see through the scams and identify sound, reputable companies that truly have your best interests in mind.
Looking for more information on debt relief plans and services? Providers of CareOne Debt Relief Services offer personalized options. They also allow you to connect with consumers who are facing similar financial challenges in the CareOne Community. There, you can ask a question, browse the community forum or offer your own feedback and advice on smart debt management.
*According to Federal Reserve Statistical Release dated Dec. 7, 2012