Sometimes, you find yourself in debt and just can’t see a way out. There are companies that will help you with debt relief, but you have to be careful to protect yourself against debt relief scams.
What is debt relief?
Debt relief generally doesn’t mean that your debt just goes away, contrary to popular belief. Debt relief just makes your debt easier for you to handle.
Debt relief can be:
- Interest rate reductions
- Changes to credit card or loan repayment terms
- Reducing the principal amount owed
- Consolidating debt
- Loan refinancing (Source)
What are some debt relief scams?
Debt relief scams tend to look like legitimate offers, but they end up charging you a huge up-front fee for not doing very much for you at all. Right now, some very common debt relief scams are looking at the Biden-Harris Student Debt Relief plan and then contacting claiming to be the official way to file for relief. It’s important to note that this student debt relief plan does not have any fees attached – so if you find someone filing for a fee, it’s a scam.
What should you look out for?
Does it seem too good to be true? Then it probably is. That’s the key to many scams. It can be hard to ignore these kinds of big promises, especially when you’re in a financial hole. But debt relief, while it exists, isn’t magic. It’s not going to be perfect and it won’t necessarily be easy, but it can help.
Are they charging a fee before doing anything for you? Absolute red flag. Don’t use this company.
You can check out the Consumer Financial Protection Bureau’s page on debt relief and check out the companies that have complaints filed against them.
You can also start with free credit counseling to get professional help with figuring out your next steps rather than going straight to a debt relief company. They may also be able to point you in the direction of a legitimate company to use.