Aptly-named opportunists are coming out of the woodwork to capitalize on several years of economic and financial pressure many families are facing, promising “easy and painless” debt relief. Unfortunately, these bad actors are plaguing “best-practice” driven debt settlement companies, and consumers trying to avoid bankruptcy are left to try and tell the difference.
When considering debt settlement, or any debt relief solution, look for the following “red flags” that the company may not be operating with your best interests in mind:
- Lack of Disclosure. The biggest complaints against the debt settlement industry tend to be against full and responsible disclosure of terms, fees and timelines. (Fact: debt settlement is a service that consumers pay a fee for—those fees should be clearly communicated to you. Fact: Creditors may put your account into collections once the debt settlement process begins. Fact: Debt settlement is a process that typically takes between 2-3 years to complete, not a quick fix.) If the paperwork you receive isn’t clear, or doesn’t cover these basic disclosures, visit www.usoba.org or www.tascsite.org for a list of accredited debt settlement organizations and frequently asked questions.
- Pressure. Debt settlement companies operating under “best practice” guidelines will not pressure you to make a quick decision or sign a contract immediately. Trustworthy debt settlement companies understand that your financial situation is very personal and requires much consideration by you and your family.
- Silence. A good debt settlement company will communicate with you openly and consistently. If you aren’t communicated with steadily regarding the status of your settlement process, you may be dealing with a “bad actor.”
- False Promises. Some of the industry’s most reported “bad actors” have falsely informed consumers that they are signing up for a “federal debt relief program” or the “Obama plan.” No such plan exists today, nor has it ever.
- Unrealistic Expectations. If a debt settlement company tells you that your credit won’t be affected by entering a debt settlement program, that your debt will be eliminated in weeks, or anything else that seems “too good to be true”—it probably is.
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I might hirea company known as debt free league, their site is http://www.debtfreeleague.com and they explained me everything including the risk of being sued. I was happy with them until i found out that they are not part of TASC. They told me that they have not decided to join TASC or USOBA but that they charge 10% in fees and they quote at 50% since the beggining due to the accurate fees after i have decided to stop sending payments to creditors. Sounds like a real company and something i liked is that they explained me all the “negative” sides of the settlement process. I checked two other companies dont recall the exact names were very similar and had the U.S. or American name on their brand. anyways they did not explain me about lawsuits and how the card were going to increase.
Thank you and any feedback, please email me.
Hi Jerry,
We definitely suggest doing your research on any debt settlement company you choose to work with. Accredited companies – those that belong to USOBA or TASC – must adhere to strict transparency and ethics standards designed to protect the consumer, and that is why we recommend these options. You may also want to check with your local BBB and request testimonies/success stories from your debt settlement agency. Best of luck to you!
[...] feel comfortable moving forward with a well-articulated plan for debt reduction and elimination. These red flags are good warning signs that a company may not be operating in your best interest. Possibly related posts: (automatically generated)Koster testifies before U.S. Senate on debt [...]
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[...] If you don’t feel comfortable negotiating with creditors yourself, or find that your efforts are not successful, consider the help of a professional debt settlement organization – just be sure you do your research to find one that will act with your best interests (and the law) a… [...]
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[...] The truth is, we in the debt settlement industry see hundreds of satisfied consumers every day, grateful for the service provided and financial burdens lessened. As with any service industry, there are bad actors that can cast a negative light on an entire industry– but USOBA and other accreditation entities advocate for consumer protection and education, urging consumers to do their homework and avoid the debt settlement red flags. [...]
[...] brush of negativity. Clarky Davis, a.k.a. the “Debt Diva,” warns of unscrupulous practices and red flags to avoid when choosing a debt settlement company, such as claims to be a part of a federal program [...]
[...] are things consumers can do to protect themselves and their financial futures, just by knowing what red flags to look for and what questions to [...]