There are many good and useful companies out there that offer true debt relief and negotiation, but there are also many that are simply scam artists. SO how do you avoid the scammers?
Avoiding Scams
Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau in the company's location. Many of these agencies, as I was reminded of after a recent post, are very good and do their jobs well, but there are many scam artists out there as well that pray on people in need of true help.
Ads Promising Debt Relief May Really Be Offering Bankruptcy
Consumer debt is at an all-time high. What's more, a record number of consumers are filing for bankruptcy and simply not paying their bills. Whether your debt dilemma is the result of an illness, unemployment, or overspending, it can seem overwhelming. In your effort to get solvent, be on the alert for advertisements that offer seemingly quick fixes. And read between the lines when faced with ads in newspapers, magazines, or even telephone directories that say:
Consolidate your bills into one monthly payment without borrowing"
"STOP credit harassment, foreclosures, repossessions, tax levies and garnishments"
"Keep Your Property"
"Wipe out your debts! Consolidate your bills! How?
By using the protection and assistance provided by federal law. For once, let the law work for you!" While the ads pitch the promise of debt relief, they rarely say relief may be spelled b-a-n-k-r-u-p-t-c-y. And although bankruptcy is one option to deal with financial problems, it's generally considered the option of last resort. The reason: it has a long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live. What's more, it can cost you attorneys' fees.
On the other side of the "what to look out for" scams are the ones that promise you a guaranteed credit cards or loan.
Advance-Fee Loan Scams
These scams often target consumers with bad credit problems or those with no credit. In exchange for an up-front fee, these companies "guarantee" that applicants will get the credit they want — usually a credit card or a personal loan.
The up-front fee may be as high as several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages through telemarketing, and require an application fee or appraisal fee in advance.
But legitimate creditors never guarantee in advance that you'll get the loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.
Recognizing an Advance-Fee Loan Scam
Ads for advance-fee loans often appear in the classified ad section of local and national newspapers and magazines. They also may appear in mailings, radio spots, and on local cable stations. Often, these ads feature "900" numbers, which result in charges on your phone bill. In addition, these companies often use delivery systems other than the U.S. Postal Service, such as overnight or courier services, to avoid detection and prosecution by postal authorities.
It's not hard to confuse a legitimate credit offer with an advance-fee loan scam. An offer for credit from a bank, savings and loan, or mortgage broker generally requires your verbal or written acceptance of the loan or credit offer. The offer usually is subject to a check of your credit report after you apply to make sure you meet their credit standards. Usually, you are not required to pay a fee to get the credit.
Hang up on anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. It's against the law.
Protecting Yourself
Here are some tips to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:
Most legitimate lenders will not "guarantee" that you will get a loan or a credit card before you apply, especially if you have bad credit, or a bankruptcy.
It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.
Never give your credit card account number, bank account information, or Social Security number out over the telephone unless you are familiar with the company and know why the information is necessary.
Credit Repair Scams
You see the ads in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
"Credit problems? No problem!"
"We can erase your bad credit-100% guaranteed."
"Create a new credit identity-legally."
"We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"
Do yourself a favor and save some money, too. Don't believe these statements. They're just not true in my experience. Only time, a conscientious effort, and a plan for repaying your debt will improve your credit report.
The Warning Signs
If you should decide to respond to an offer to repair your credit, think twice. Don't do business with any company that:
- Wants you to pay for credit repair services before any services are provided
- Does not tell you your legal rights and what you can do yourself — for free
- Recommends that you not contact a consumer reporting company directly
- Suggests that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security number
- Advises you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
So there you hae it a few things to look out for when you are repairing your credit, dumping your debt, or trying to get new credit. For more information at no cost, please visit www.DumpDebtGrowWealth.com for reports, audios, and videos to help you dump your debt now.
I am yours in success,
Randall