You have probably seen the commercials. It is late at night and the announcer starts off by saying,
"Do you have more than $10,000 worth of debt? Have you lost all hope? Just call 1-800-get out of debt and we will slash your interest rates, cut your payments in 1/2, and negotiate your total amount of debt down. Just call us today and all of your troubles will be settled."
As you watch the commercial you want it to be true so bad that you are suspending all doubt to believe that someone has the magic formula. They know something that you don't know - you hope.
Well, welcome to the debt settlement/consolidation nightmare. I have several chapters on these companies in my book Deceptive Money. They only make matters worst. They are far from a solution. If you are current with your payments, I know of companies telling their clients to just stop paying and go into default. This is the worst advice ever. I have come across proposals that were so misleading that they were borderline fraud.
I think that this story about Freedom Debt Relief sums up the whole industry. After all, they are one of if not the biggest in a corrupt industry.
"This past week, the Consumer Financial Protection Bureau (CFPB) reached a settlement with Freedom Debt Relief in which the company, while not admitting guilt, agreed to pay a $5 million civil penalty as well as $20 million in restitution to affected customers. The federal watchdog agency alleged in a lawsuit that the California-based company violated the Federal Trade Commission’s Telemarketing Sales Rule by charging people in advance of debt-relief services, which is illegal.
The CFPB further said the company broke a second law — the Consumer Financial Protection Act — when it charged debtors without actually settling their debts. The agency alleged that Freedom charged fees — sometimes thousands of dollars — even when borrowers negotiated settlements on their own with their creditors."
Debt consolidation is not real unless a company is loaning you money at a set interest rate with a definite term that pays off. These companies just make a tough situation even tougher. They are making claims that they cannot back up while taking exorbitant fees.
Finally, they are looking to take advantage of people who are desperate. Get out of debt the right way. Go check out my book Deceptive Money. If you don't have the extra funds to buy the book, just let me know (firstname.lastname@example.org) and we will send you one for free.
*1-800-get of debt is a made up company and not intended to represent any company specifically.