Debt of any kind can be a scary tribulation to deal with, especially when it seems like there’s no way out, or the options are slim to none. During this time, any program or company offering to help reduce or settle your debt for next to nothing can be incredibly tempting, but there are many scams to look out for.
When considering a company or program to partner with to reduce your debt, consider going online and researching the top debt relief companies to see which one best suits your needs, and is reputable.
Consider Opening Negotiations With Your Card Companies
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Before seeking out a program or debt relief company, the first step you should consider is opening negotiations with your card companies and resolving the debt yourself. These could range from anything like lower monthly payments to alternative payment plans, and maybe even lower interest rates. There is no guarantee they’ll be open to negotiations, but you’ll never know unless you try. In the long run, many creditors will appreciate that you’re willing to work with them to negotiate your debt before employing a third party.
If this isn’t an option, here are some tips on avoiding debt relief scams.
Pay Attention To Red Flags
When it comes to a program or company helping reduce your debt, the simple rule “if it seems too good to be true, it probably is,” does apply. Be wary of red flags that start popping up, as attention to detail will save you a lot of headaches. Some signs to be wary of are if you’re given a guarantee that they’ll have your debt reduced in a specific amount of time, or that they can remove negative marks from your report.
Also, don’t proceed with a certain company if they require you to pay “service fees” or “voluntary contributions” early on, as they’re most likely phishing for your credit card information.
Any reputable company will be willing to send you free information on the services they provide, so if someone is requesting your banking information before they want to assist, then it’s probably best to avoid this company. Be aware of illegal robocalls, as well. If you haven’t given direct permission to the company to forward you these automated calls, then hang up the call, otherwise, you’ll only continue to receive more of them.
Know The Difference Between DMPs and DRPs
DMP, or Debt Management Programs, are agencies that will work with creditors on your behalf to lower interest rates, monthly payments, and limit the number of penalties on your score. Not only will this mean there’ll be fewer creditors hounding you, but this may have a better impact on your overall credit score. A DRP, or Debt Relief Program, is a program that focuses on relieving your debt in three to five years through lower debt negotiations while focusing on lower monthly payments. That being said, DRPs can have more of a negative impact on your credit score, versus DMPs, which show creditors you’re willing to work with them on resolving your debt.
Work With A Credit Counseling Agency
The Department Of Justice (DOJ) has recognized that there are a number of companies out there just looking to exploit those swimming in debt, so, they’ve collated a list of approved credit counseling agencies. Working with an approved agency to discuss your overall financial situation might prove beneficial in the long run. Not only will they give you a better idea, overall, of where you’re standing debt-wise, but they’ll be able to provide you with valuable information, and might be able to recommend you to specific programs if a DMP is appropriate in your circumstances.
Acknowledge Your Concerns
If you’ve decided a DMP is the right path for you, and have settled on a third party to help negotiate your debt, it’ll be tempting to let them take care of it entirely and relinquish yourself of the worry and stress. However, this is the part that is most crucial. You’ve done the research; you’ve spent hours on the phone talking with different companies—this is where you have to stay on top of what’s happening with your credit. If you can’t shake the feeling that this third party might not be working in your favor, call your creditor and see if any payments have been made, and if so, how much has been paid toward your debt. If the amount is lower than what you have paid to this third party, then you’ll want to address this concern. If no payments have been made yet, then this is a telltale sign you’re being scammed and must cease business with this third party immediately.
In all, there’s a lot to consider when engaging a third-party debt relief service, but these decisions don’t have to be made blindly. With the tips above and reputable information provided by the DOJ, there’s ample information to help you make an educated decision, plus what to look out for to avoid being scammed. Regardless of whether you decide to repair the debt yourself, or engage a third party, it’s crucial you make an informed decision.