Everything is more expensive these days. That - along with higher student loans and credit card debt has more people turning to debt relief services. But often people who get help are left financially worse off.
Question: Do debt relief services work? Are they even legit?
Debt relief or credit repair companies promise to negotiate lower payments or even help wipe out your debt completely but you have to be careful about how you go about this.
The Better Business Bureau Scam Tracker shows 11,000 complaints related to debt relief companies with people losing $2.4 million since 2020. There are a few things to consider when shopping around for help.
Watch out for the promise of a quick fix
The BBB’s Leah Napoliello warns to watch out for companies that offer quick fixes, promises, or guarantees.
“There’s no real guarantee they could try that and hopefully they can negotiate. But if they don’t know your financial situation or know really what your deal is, they have no way of knowing if they can guarantee they can get your debt taken care of.”
Don’t pay upfront for any services
Many shady debt relief companies ask you to pay fees before they do anything. By law, these companies are not allowed to charge advance fees. Also, avoid giving out any personal information to a company until you know the company is credible.
Don’t stop paying your bills
Watch out for any company that says you should stop paying your bills during the process.
“You should still continue to pay your creditors. They may be working on a negotiation with your creditors, but you still should keep on paying them because that could only put you in a worse situation if you stop paying them,” said Napoliello.
You can check ratings of credit repair companies on the BBB’s website. But also know that you can do many of the services these companies offer. If you are in default, call debt holders yourself and try to negotiate a lower payment.
To report a suspected scam company contact:
- Better Business Bureau, Phone: (713) 868-9500 or BBB Scam Tracker online at https://www.bbb.org/scamtracker/reportscam
- Federal Trade Commission, phone 877-FTC-Help