Debt Relief Scams: How to Protect Yourself

As the U.S. economic recession drags on, millions of Americans continue to struggle with managing debt and paying off debt. Unfortunately, during these troubled times there are those who seek to take advantage of those in need. If you or someone you know is knee-deep in debt, here is what to avoid as well as what to look for when it comes to legitimate debt relief programs vs. debt relief scams.

If it sounds too good to be true…

The first word of advice on debt relief scams is this: If it sounds too good to be true, it probably is. Debt does not happen overnight. Debt tends to build and snowball overtime until suddenly a person finds that they are unable to successfully manage their debt and continue to meet their monthly debt obligations.

Any person or company that promises instant and overnight debt elimination should be avoided like the plague. It’s simply not possible to eliminate debt overnight. Legitimate debt relief programs involve analyzing one’s financial condition for strengths and weaknesses and then developing and implementing a plan to get out of debt. Even the best debt relief programs, such as debt settlement, can take one to three years to complete, at which point one becomes completely debt free.

Beware debt consolidation loans

Another somewhat unscrupulous debt relief program to be wary of is debt consolidation loans/home equity loans. These are new loans which are taken out to pay off existing loans. This strategy is both risky and in most cases simply does not make good sense. In the case of taking out a home equity loan to pay off credit card debt for example, is the exchanging of unsecured debt (credit card debt) for new debt that is secured by one’s home. If the consumer is unable to make their home equity loan at sometime in the future, they would be at serious risk for losing their home.

Another telltale sign of a scam is if a supposed debt relief company asks you to pay them for their services in advance – long before they have obtained any measure of debt relief for you. It’s possible you could never see your money again and receive no amount of debt relief help.

Legitimate debt relief companies, however, do provide a valuable service to consumers who are in debt. Legitimate debt relief companies typically act as a consumer’s advocate, and negotiate between the debtor and their creditors to obtain concessions in the amount of debt that is owed. For these debt negotiation and debt arbitration services, legitimate debt relief companies typically receive their fee as a percentage of the savings realized. This is the only way in which debt relief programs should be paid for – never up front.

Using this advice will help you navigate the debt management maze so that you can get the real debt relief that you deserve.

John Chase works in the finance field and writes about issues concerning credit and debt. To learn more about legitimate debt relief, please visit Total Debt Relief at www.totaldebtrelief.net/.