'Debt relief' offers can often bring more pain
The ads are everywhere. And for someone drowning in credit card debt they're mighty appealing.
"Be debt free in as little as 24 months!" one ad says. Or, "erase your debts 50 to 70 percent or more!"
It sounds so easy.
"But people who actually get into these deals find out that you don't eliminate your debt at all in most cases," says Linda Sherry, with the group Consumer Action. "And if you do, you eliminate a very small debt."
Sherry says most for-profit debt relief companies charge an upfront fee -- they want 14 to 18 percent of the total amount owed before they do anything.
Clients are often told to stop paying their bills, which can make things worse.
"It doesn't stop the people who you really owe the money to from adding fees and other charges to the debt and it doesn't stop bill collectors from calling," Sherry says.
Debt settlement companies insist they help people. But the Federal Trade Commission has received so many complaints it's about to issue new rules to regulate the industry.
Want to get real help? Contact a reputable nonprofit credit counseling agency.
Look for one that belongs to the National Foundation for Consumer Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
The first appointment should be free and normally fees are based on what you can afford.
For more information
More Information: Be wary of promises from debt relief companies
Complaints to BBB against debt settlement companies on the rise
"Be debt free in as little as 24 months!" one ad says. Or, "erase your debts 50 to 70 percent or more!"
It sounds so easy.
"But people who actually get into these deals find out that you don't eliminate your debt at all in most cases," says Linda Sherry, with the group Consumer Action. "And if you do, you eliminate a very small debt."
Sherry says most for-profit debt relief companies charge an upfront fee -- they want 14 to 18 percent of the total amount owed before they do anything.
Clients are often told to stop paying their bills, which can make things worse.
"It doesn't stop the people who you really owe the money to from adding fees and other charges to the debt and it doesn't stop bill collectors from calling," Sherry says.
Debt settlement companies insist they help people. But the Federal Trade Commission has received so many complaints it's about to issue new rules to regulate the industry.
Want to get real help? Contact a reputable nonprofit credit counseling agency.
Look for one that belongs to the National Foundation for Consumer Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
The first appointment should be free and normally fees are based on what you can afford.
For more information
More Information: Be wary of promises from debt relief companies
Complaints to BBB against debt settlement companies on the rise
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