Are you a Debt Relief Scam Victim?

Are you thinking of pursuing a complaint or taking action against a debt settlement company?

You will find many useful links on this site to help facilitate that process however, you should be able to specify in what way you may have been defrauded before taking steps to formally make a complaint against any company. At this point, you should find an empty folder and read further.

There are some common fraudulent practices that you should be aware of:

Deceptive Marketing and Advertising:

It's not uncommon that a company marketing settlement services might mislead their audience into expecting results that are rarely if ever achieved. What was the wording used in the ad that captivated your attention? Understandably, you may not remember exactly what the content of the message was, but there may be lingering evidence that could help you recall. Many folks turn to the web when they seek out a settlement company. You could have printed a page of their website at the time you were conducting your research. It could be that the website you originally visited hasn't changed it's contents since your original visit. You may have responded to a mass email announcement promising savings of 60 cents on the dollar. Do you still have that email? If you were originally telemarketed, you may still have a message saved on your voicemail. Finally, you may have received a postcard, flyer or other mail piece to which you responded to their call-to-action. Any evidence you find, you should set aside.

Misleading Sales Presentations: 

Most sales reps in most fields are at least partly or 100% paid on commission. While some companies may be careful not to cross the line in their marketing messages, it can be considerably more challenging for a company to ensure that it's sales people are honest when they deliver their presentations. If you have any emails or other correspondance from the rep with whom you dealt, look any verbiage that speaks to guarantees, projected settlements, how your creditors will be dealt with or anything specific such as, "You will be debt free in 36 months." Whatever you find that seems misleading, you should set aside. It is estimated that there are greater than 2,000 debt settlement companies in the U.S.

Misrepresented or Undisclosed Consequences:

Any debt settlement program, regardless of the reputation or good intentions of the firm is going to have some heavy negative consequences.  If any of the following consequences were not blatantly disclosed to you, try and collect any evidence you can from any of the available means discussed above that may point to a contradiction of the truth:

• Entering a debt settlement program does not stop creditor calls.
   
  
• Your credit will be effected negatively for many years (any derogatory activity can appear on your credit report for as long as 7 years from the date of the most recent negative activity on your credit profile)
  
  
• Creditors do not receive monthly payments once a client is enrolled in a settlement program.  In fact, they generally will not receive a payment until there is a sufficient enough amount of money saved by the client to satisfy the amount of the settlement.  Be advised that this can take anywhere from a few months to a few years depending upon the size of the original account(s) and the amount of money the creditor may be willing to accept, if they are even willing to accept a settlement at all.
  
  
• Creditors do not have to settle and they may elect not to settle.
  
  
• It is quite common that a creditor will sue a debtor if an account remains delinquent after several months.  Being enrolled in a debt settlement program does mean that you will not be sued.
  
  
• Bankruptcy remains on your credit report for 10 years but the clock starts ticking the date the filing is recorded.  If you enroll in a 4 year debt settlement program and you have a creditor that will not receive their settlement until the end of the 4th year, the receipt of that last settlement is considered a derogatory activity (they are after all receiving less than the amount owed) and that means the negative reference could remain on your credit profile for an additional seven years thereafter. 
  
  
• A settlement company cannot tell you that a creditor won't report derogatory activity or that they will do nothing that could impact your credit negatively for a long period of time.   
  
  
• It is not legal for a creditor to agree to wipe clear (expunge) negative history from your credit profile as part of the terms of a settlement agreement.
  
  
• Late fees and penalties will be incurred up until the account is settled.
  
  
• A savings quote or estimate is just an estimate.  No promises or guarantees can be made regarding what amount a creditor may settle for or for that matter if they will even settle at all.
  
  
• Any savings quote should include accrued interest and penalties plus the settlement companies' fees.  Example: you owe $30,000 in credit card debt.  The company indicates that they will save you approximately 40%-60%.  To that they should add the settlement company fees (typically 15%) and +/- 10% for accrued interest and penalties.  Realistically, you may be looking at paying back 60%-80% total.   Also, bearing in mind that no company has to settle, you could potentially be looking at having to pay back 100% or more of the balance owed at the time you enrolled in the program.