When seeking help to get out of debt, watch out for misleading debt relief companies. The FTC reports debt relief scams are on the rise and targeting consumers with significant credit card debt. According to the Federal Trade Commission, these companies promise to negotiate with creditors and reduce financial obligations for a flat fee up front, then rarely if ever provide the services promised.
The Better Business Bureau, or BBB, warns that more fake debt relief companies are popping up every day because household debt in America has increased since the pandemic and totals over $17 trillion. The Bureau received over 11,000 complaints from consumers who paid a flat fee up front for services that were not rendered, between the beginning of 2020 through the summer of 2023.
There are legitimate companies that have been negotiating with creditors on behalf of consumers and settling debts for 10, 20, or even 30 years. And it’s easy to tell them apart from the scammers, they won’t ask you to pay up front for service. Other ways to spot a scam are,
- They call or email you, not the other way around.
- They guaranteed positive results.
- They tell you to stop communicating with your creditors.
- They use high pressure sales techniques to get you to sign on.
The safest way to get out of debt is to reduce monthly spending by cutting back on the non-essentials like streaming apps and dining out. Create a spending plan that allows you to pay your monthly expenses with extra money going towards paying off the lowest credit card balances first. Once you pay off one credit card, you’ll free up more money to put towards the higher balance cards. For financial tips or answers to questions about college savings, tax planning, retirement, or investment management, call Alloy Wealth Management at 800-689-3935.