Dirty game of debt settlers
If person deep in debt sees some kind of service which promises to take away their debt would definitely lure him into trying it out. Imagine yourself deep in the debt hole, paying hundreds of dollars every month to your lender and after a decade you are still paying just the interest! Due to interest rate rise, many borrowers have suffered a lot and even filed for bankruptcy. A person is large debt is quite vulnerable to such debt settlement schemes. There are several debt settlement companies who exploit this vulnerability to make some profit for themselves and as a result the person in debt gets buried in a deeper hole which he just dug by signing up blindly a company having “National” in its name.
Debt settlement services have often named themselves in a way which makes them look very legitimate and promising. Take an example of National Consumer Council and the Debt management Foundation. Sounds very legitimate and trustworthy, but is it really? They call themselves nonprofit organization, but a recent crackdown by FTC has exposed that these so called nonprofit organizations have been siphoning all the money to a for-profit company. By hiding their for-profit status such organizations got access to the National Do not call register for advertising their services.
While these companies advertise their promising services, they never let them consumer know about hidden charges and penalties that might result. In the process, many debt holders signed up and availed these services just to find out that instead of rising out of from the debt-hole, they have sunken even more, so much that some went bankrupt! FTC crackdown charged them for lying about the services they offer and for not giving clear indications of the hidden penalties. Crackdown of two major companies in the scene may have sent an alert to people indicating them to stay away from such scams or at least verifying the legitimacy of service before availing them. According to the law, this entire thing is not a scam, but rather failure conduct business properly and causing mental harassment to the consumer. That in itself is illegal, but not enough to shut down these companies.
No company is going to offer their service for free. The people that work there have their own house to manage and bills to pay, so whatever it be they are going to charge you. Even if they promise to take away your debt in so and so years that may not happen because you could end up paying more money to the debt settlement company itself. FTC exposed how AmeriDebt Inc. collected $200 million from these hidden fees and costs.
Some debt settlement companies may actually be good. Not all are bad! They have contacts with the loan companies and can help reduce interest rates or getting rid of it altogether. By looking the company history, and researching about it can save you from a financial disaster. But again, you have to be aware about those fake, paid reviews which they might put all over the internet. It could be the best to stay away from them and starting to manage your finances and reducing unwanted spending.