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As people across the nation find that they are deeply in debt, they begin to search for a simple and easy solution to their financial problems. In many cases, this means that the person will contact debt settlement companies that promise to eliminate their debt and give them a clean slate to start fresh. In recent years, some of these companies have become very good at taking advantage of people in difficult financial situations, causing many people to become more deeply mired in debt and owing more money than they did before contacting the debt settlement company.
There are some indicators that will tell you whether the debt settlement company can really help you or whether the company is basically a scam to steal the money that the person has left. By keeping these things in mind, the risk of being taken advantage of by a bad debt settlement company will be greatly reduced.
Some of the companies that offer debt settlement services tell their customers that charges, interest payments, or fees that have been charged to their account are illegal or that there are flaws in the credit agreement that make the entire debt amount illegal for collection. With all of the lawyers that companies that extend credit hire to work for their firms, the chance of this actually happening would be slim to none and even if there was a small mistake in the credit agreement, it would not invalidate the purchases that have been charged on the account.
A debt settlement company may offer to contact the creditor on the person’s behalf and, after time has passed, the company will tell the person that the creditor is discharging the debt or a lawsuit against the creditor has been filed on their behalf. People that rely on these statements often find that their debt has increased due to finance charges and late payment fees. The person may even be sued by the creditor for the balance of the account.
Some debt settlement companies may offer to eliminate the total amount of debt by creating a new credit profile for the person so the person can start accumulating fresh with a new credit history. This process is accomplished by creating a fake social security number and creating a new credit profile under the person’s name and linked to the new social security number. This is illegal and, if you are caught using this social security number and credit profile, you could be prosecuted and could be facing felony charges of fraud and identity theft that could result in going to prison for years.
Although there are many debt settlement companies that can help a person reduce the amount that they owe, choosing a bad debt settlement company can lead to increased debt, being sued for large amounts of money, or even facing criminal charges. The best solution is to do some research on the company you are thinking about doing business with to make sure that they are reputable and being on the lookout for any of these debt settlement scams.
