The Dept. of Justice Consumer Protection Branch is warning consumers about debt relief scams and providing tips to avoid such scams.Â Tips include:
Fraudulent debt relief companies will often make claims of being able to negotiate a one-time settlement with creditors that will reduce a consumerâ€™s principal by 50 percent or more.Â The Consumer Federation of America, an association of non-profit consumer organizations, warns that such a promise is a virtual impossibility.
If you have trouble making credit card payments, immediately call the creditor to work out a payment plan.Â If that is unsuccessful, a non-profit credit counseling service may be able to help you.Â These services may charge a small fee, but the cost will be substantially less than using a debt relief company.Â An excellent resource for locating a local credit counseling service is the National Foundation for Credit Counseling, at www.nfcc.org
If a company offers a â€œone size fits allâ€ solution, what they are really offering is a â€œno size fits anyoneâ€ problem.Â Legitimate credit counseling services tailor a consolidation plan to each consumerâ€™s individual needs.
Do not be afraid to ask questions. Demand that the company disclose set-up and maintenance fees, and that these fees be set in writing.Â According to the Consumer Federation of America, consumers should not pay more than $50 for the set-up fee and $25 for monthly maintenance of the account.
Do not rely on the companyâ€™s website.Â Conduct your own research of the company â€“ the Better Business Bureau and the state consumer protection agencies are valuable resources.
For more information on debt relief scams, see the Federal Trade Commissionâ€™s website. Additional information on legitimate debt relief services can be found on the Consumer Federation of Americaâ€™s website.