I have written previously about why for most people bankruptcy filing is a better option than getting tied up with debt settlement companies, but for anyone who is determined to try one out, be wary of getting caught up in scams run by these organizations.
How can you tell if a debt settlement offer is on the level? Here are three red flags that should send you running the other way, in to the arms of your friendly neighborhood bankruptcy lawyer:
RED FLAG: The debt consolidation company charges high up-front fees or monthly fees.
RED FLAG: The debt consolidation company wants to sign you up for their service; but they have not reviewed your financial situation.
RED FLAG: The debt consolidation company wants you to begin making payments into their plan before your creditors have agreed to take part in the plan.
In general, be very wary of debt consolidation or debt settlement companies who are not legitimate and/or make claims that they can make debt “disappear.” This is simply untrue. Debt consolidation simply puts all of your debts together so that you make one payment as opposed to several payments. Unfortunately, many debtors end up paying a very high premium for this type of service.
By Doug Beaton