Debt Settlement Scams

A recent report stated that there was currently $800 million in credit card debt in the US and the average US household has around $14.2k in credit card debt. With the recession still in full swing and the unemployment rate teetering around 9.2% there are a lot of people at risk to get into some serious credit card debt trouble.

Some of these people are going to get to the point with their finances and debt where it becomes unmanageable and they are going to seek out professional help for their personal finance crisis.

If you do a simple internet search for, "debt settlement" it will return 13,200,000 results, so sifting through the chaff is going to be a arduous task and what makes the search for a debt solutions organization even more difficult are all the companies out there that are complete scams.

Most debt settlement scams are pretty simple, they basically advertise themselves as legit businesses and try to find people that are desperately trying to get out of credit card debt or avoid bankruptcy.

Once the debt settlement organization promises the consumer that they can dramatically reduce their credit card debt, or completely eliminate their debt they say that they can get everything started once they receive their up front fee. The upfront fee is usually a significant dollar amount, and once they receive this normally large fee the debt settlement organization will magically disappear.

So if that tactic seems too blatantly nefarious another tactic that these companies will try is to tell the consumer to stop making payments to their creditors and start making those payments to the debt settlement organization. The consumer will be under the impression that while he is making a payments to the debt settlement organization that the debt settlement organization is negotiating a settlement with the creditors. When in fact the debt settlement organization is just taking the money and has no intention in negotiating with the creditors.

It's no surprise that people make hasty decisions when they're under stress and desperate, and most scams try to exploit their victims vulnerability and leverage it to get as much money as they can from their victims.

There are some things you should watch out for in order to avoid these debt settlement organizations scams, one thing you should do is conduct a lot of research on the company you're about to do business with. See if they're members of the BBB, or if they have some unsavory reviews online.

Another thing that you can look out for is if they are using high pressure tactics to get you signed up before they even ask any preliminary questions in regards to your personal finance situation.

Even a legit debt settlement organization has questionable practices due to the fact that with debt settlement you're essentially ceasing to pay your debts, which in some legal circles seen as an illegal activity or will hold you liable.

As a consumer your best bet is to see the guidance from a non-profit credit counseling organization. These organizations can most likely guide you towards the best solution for your unique debt problem