Don't fall for credit card debt relief scams, just do it yourself

The long, deep recession and its aftermath have created an environment in which debt reduction scams and debt relief scams flourish. Credit card debt is a major problem as the horrible economy has put millions in financial distress. Predatory debt relief companies promising peace of mind are seeking out individuals drowning in debt. But with financial discipline and effort people can stay away from even the so-called legitimate debt reduction services.

Resource for this article: Don’t fall for credit card debt relief scams, just do it yourself

A debt relief illusion

To provide debt reduction services, most companies pitching these programs offer loan consolidation plans in which you take out one more loan to pay down existing debt. Another tactic is promising to persuade your creditors to settle for under you owe. Too often what matters most to them is taking your money, not helping you reduce your debt. When it comes to negotiating for a settlement, bear in mind that it will show up on your credit report as failure to pay the debt in full, which will subtract from your credit score.

Debt management misrepresentation

That financial predators sell themselves as legitimate companies with the ability to help consumers overwhelmed by credit card debt is no secret. The Los Angeles Times reports that investigators for the Government Accountability Office posed as distressed consumers seeking help from debt management companies. Making wild exaggerations of their success rates, some companies promised savings of as much as 50 cents on the dollar.

Debt reduction fantasies

After paying big up-front fees to debt management companies, often running to several thousand dollars, many consumers end up deeper in debt than they were before. MSNBC tells the story of a woman in North Carolina who was promised by a debt management company that they would lower her interest rates enough to pay down credit card, mortgage and car loan debt three to five times faster. After paying $ 499 up front, she was assured that rate of interest savings would make up for the fee within the first 30 days on her way to a total savings of $ 2,500. No interest rates were reduced, the company would not refund the $ 499 fee as they promised and the Federal Trade Commission sued the firm.

Government debt relief scams

Claiming "government approval is a common angle pursued by debt relief scam artists today. Statements made by debt management business representatives as reported in the Los Angeles Times article, also as their advertising, has shown that the companies attempt to portray themselves as partners in a government program resembling the recent bank bailout. The "Federal Debt Relief Program" is the name of one company at the top of search engine results. "U.S. National Debt Relief Plan" is one more.

Debt relief independence

Of all the hundreds of debt reduction and debt relief opportunists spreading across the Internet, not one is part of a government-backed program. Debt relief has become a huge industry intended to kick individuals when they’re down. The best way to debt reduction is to get on a spending budget, pay down your debt and pay your bills on time. Individuals don't need a debt management business to negotiate with creditors or refinance loans when they can do it themselves.

Free debt management advice

If you aren’t sure how to solve your debt problems, contact the National Foundation for Credit Counseling. The NFCC is a nonprofit community organization that provides free and confidential debt management advice to any person that needs it. The NFCC offers consulting in person or by phone. Take a look at nfcc.org to discover a counselor with your area.

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Los Angeles Times

latimes.com

MSNBC

msnbc.msn.com

NFCC

nfcc.org