Understanding how debt works is very important. Debt settlement is negotiating with your creditors to reach an agreement. Once one understands debt and debt settlement, it is easier to pick out the scams involved in debt settlement today. There are many ways to pick out a good debt settlement organization that will help you reach your ultimate goal of becoming debt free. Finding the good ones is a difficult task.
Debt Settlement Scams
Debt settlement scams exist because the organizations operating them are able to make money quickly and disappear. Many consumers are desperate to settle their debts and do not spend enough time researching the organizations to ensure they are legitimate. The organizations get a list of your creditors, then find out your monthly income, pretend to contact your creditors and set up payment arrangements through their organization. You send your payment to them and they are supposed to make payments on your debts. In reality they never make the payments and simply collect your money for a few months and then disappear.
Avoiding Debt Settlement Scams
Obviously, the best way to avoid a debt settlement scam is to not be in debt. However, everyone knows this is not entirely possible. There will always be some form of debt in everyone’s financial history. The next best way to avoid the scams is to maintain all of your open accounts with on time payments each month. Again, with the economy struggling, this too is not always possible. Finally, if you do find yourself in financial trouble and in need of a debt settlement solution, find an organization using nationally accredited databases.
When working with a debt settlement organization, remember that most will charge a low enrollment fee and then low monthly payments while working on your finances. The debt settlement companies that charge enormous enrollment fees and high monthly fees are usually not legitimate. Most are trying only to make a profit before they are forced to disappear. Checking accreditation status and previous customer feedback is very important before selecting a debt settlement organization.
Technology
The technological advances of today have made it very easy for anyone to create and maintain a website that looks legitimate. Included in this fraudulent website could be fraudulent customer feedback as well. It is important that one go to the national databases and look for the name of the organization prior to requesting information or speaking with them. Once you are aware of their status, contact the ones that are legitimate and begin the process. Make sure that you use the national databases to do this. On the internet, anyone can claim to be accredited and nationally recognized.
Along with have the ability to pretend to be something they are not, organizations have the ability to use any information you place on their website to attach to your bank account, steal your identity among other things. Never enter personal information on a website that you are unsure about. It is best to err to caution than to give the fraudulent organizations all the information they need to further your financial troubles.
Scams
There are a few ways to pick out the fraudulent debt settlement firms quickly. First, any organization that offers to settle all of your debt for pennies on the dollar is likely not legitimate. Most of the creditors are not going to take five cents on a dollar. There is much negotiation that goes into reaching a settlement. Normally, when working toward an agreement, the debt settlement negotiator will offer an amount lower than what the debtor can pay, allowing room for negotiation. The creditor will counter offer and so it will continue until an agreement is reached that is acceptable to both parties. Then the agreement is drawn up in writing and both parties sign the agreement, maintaining a copy for their own records. Payments are made and the debt is paid off. When a debt settlement organization is not legitimate, arrangements will be drawn up usually, but the creditor does not sign the agreement and in most cases has no knowledge of the agreement.
Debt settlement organizations that will not provide proof of their accreditation are also likely fraudulent. Accredited firms are proud of their status and will provide any proof you request from them. Checking the national databases will confirm their accreditation, but you can ask them which database they are registered with to cut down on the research time. If they seem to not know what you are talking about, obviously they are not likely legitimate.
In the long run, doing the research upfront and ensuring you are working with a legitimate organization may be time consuming but will prove well worth the time. You do not want to find yourself in a situation where you are further in trouble than you were before you began the process of debt settlement.
