Useful Tips on Spotting and Avoiding Debt Settlement Swindles

JOHANNESBURG (Capital Markets in Africa) – When you fall behind on loans, you will usually find yourself on the receiving end of legal notices and threatening debt collectors. When you are feeling really desperate, it can be very easy for you to fall prey to dishonest companies claiming to solve your debt problems overnight. Some red flags that you should be looking out for when you are seeking debt settlement:

Promises to Improve Your Credit Score by Removing Genuine Negative Items
There is no real way that allows you to just erase your financial mistakes and make your credit report spotless. Don’t even believe scam companies that promise to actually demonstrate it to you because the effect is purely temporary. These companies send a large number of requests to the credit agency for correction of disputes on your report in the hope a few would slip through without verification by the lender in the allowed time of 30 days. However, the deleted items are back again when reported by the collection agencies in the next cycle.

Unsubstantiated Guarantees
Beware of companies that guarantee the elimination of the full debt or stopping of collection and lawsuits. It is impossible for a company to give you iron-clad guarantees and you can be sure that any such promises are just marketing gimmicks. Before signing on with any debt settlement company, it is vital that you conduct thorough research. If the various debt settlement reviews give a poor rating, it is sensible to stay away from that company.

Blind Faith on BBB Ratings
You should never make up your mind about a debt settlement company on the basis of just the BBB ratings. There have been a series of reports against the BBB for having given A+ rating even to businesses that have been prosecuted for grave crimes but paid their membership fees. It is a very good idea to look at other sources of information besides the BBB so that you can make a better judgment regarding the integrity of a debt settlement company.

Paying Fees Upfront Before the Debt Is Settled
You should know that under the law, it is completely illegal for any for-profit debt settlement company to charge their customers any fees before settling the debt. There also has to be a written agreement between the customer and the creditor stating the terms of the settlement and the creditor must have been made at least one payment after the settlement has been negotiated. The debt settlement company cannot charge different fees for different debts when it takes it fees as a percent of what it saves its customers – the same percent fee has to be applied across all the debts of the same customer.

Conclusion
Debt settlement can be quite tricky so you should never believe any company that claims it to be otherwise. Hiring a lawyer with experience of settling debts can be a sensible idea for preventing yourself from getting ripped-off by a scam company.

Author Bio: Isabella Rossellini works for a leading law firm. She has extensive experience of negotiating with debt settlement companies on behalf of clients. Isabella contributes regularly to numerous debt settlement reviews on the web.