People across the country are finding that they are deeply in debt with no way to return to secure financial footing. As they search for a solution to their financial problems, many people contact debt reduction companies that promise to eliminate their debt and give them a clean slate to start fresh. In recent years, companies that scam everyday people have become very good at taking advantage of people in seemingly impossible financial situations, but there are some indications that will tell you whether the program being offered can really help you or whether the program is a scam to steal what little money you have left. By keeping these things in mind, you will reduce the risk of being taken for a ride by an unscrupulous debt reduction company.
Offering A New Credit History Or Credit Score
Some debt reduction companies are offering to reduce a person’s total personal debt by creating a new credit history and credit score for the person, wiping the slate clean so people can start accumulating credit all over again. What the person does not know is that this process is typically accomplished by creating a fake social security number for the person and creating a new credit profile under their name with 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 sent to jail under felony charges.
Finding Credit Agreement Loopholes And Debt That Cannot Be Collected Legally
Some of the companies that offer debt reduction services lower what they say their customers owe by telling them that charges, interest payments, or fees that have been charged to the person are illegal. They may also tell the person that there are flaws in their credit agreement that work in their favor to make the entire debt amount illegal for collection.
The company will offer to contact the company on the person’s behalf and after some time has gone by, will tell the person that the company is discharging the debt or that they have filed a lawsuit on the company on their behalf. People that believe these statements often find themselves deeper in debt due to finance charges and late payment fees or are sued by the creditor for the balance of the account. This dramatically reduces their credit score and prevents the person from obtaining any credit account until the person’s credit score has been rebuilt.
Although there are some debt reduction and financial planning programs that can help a person reduce the total amount that they owe to creditors, many of the promises that debt reduction companies make can lead to deeper debt, being sued by creditors for large amounts of money, or even having criminal charges levied against the person. The best solution is to contact one of the many government programs offering free financial planning and following the advice that they give you to the letter to reduce your debt in a safe and legal way.