How’d you like to lower your monthly credit card and loan payments — guaranteed? It’s an offer that sounds mighty appealing to anyone struggling to pay their bills. A growing number of companies across the country claim they can do this by either lowering your interest rate or reducing the amount you owe.
But beware! Some of these debt relief programs are scams run by con artists who can’t deliver on their promises. If you fall for their pitch, you could lose hundreds of dollars in fees and find yourself in worse financial shape. You’ll owe just as much as when you started, plus have additional late fees and other penalties to pay.
Rose was willing to share her personal horror story as long as her real name was not used. It started with a phone call from a debt management company. The representative told Rose she could get her creditors to lower their interest rates. This would let Rose pay off her credit card, mortgage and car loan debt three to five times faster. “She specifically told me that I would save at least $10,000 in a very short time and would likely save much more,” Rose stated. Rose was skeptical, especially when she heard the price was $1999. But the salesperson assured Rose she would see lower interest rates within the first 30 days of the program and that these savings would more than cover the fee.
“She spoke with such confidence and zeal that I was moved to tears,” Rose says. “I was thrilled and full of hope to know that I would finally be able to pay off my debts.”
But it didn’t turn out that way. Despite repeated attempts, Rose’s “financial consultants” could not lower the rates on any of her credit cards. The company will not refund Rose’s $1999 fee as promised. This is a widespread problem
In the last few years, the Federal Trade Commission has sued more than dozen debt relief companies. “They simply lie to consumers,” says the FTC’s Alice Hardy. FTC ad IRS investigators have also found some counseling services that claim to be non-profit when they are actually a for-profit company. The non-profit pitch can make a potential client feel confident about signing up for the service. “They’re preying on the consumer’s trust,” Hardy says. Some of the bad apples in this industry mislead people about their charges. “They either say there are no fees involved or just a small fee,” Hardy explains. Sometimes, they don’t mention fees at all.
Bruce, who lives near Seattle, signed up with a company that promised to lower his interest rates. He was told to send them a check for $1,265. “It was my clear understanding that money was going to pay off my credit card bills,” Bruce told me. It turned out to be a “referral fee” to find him a company that would supposedly help him.
“It was a nasty experience,” Bruce says. “They basically stole my money.”
Warning: Debt settlement programs
Some companies now claim they can negotiate a one-time settlement with all of your creditors that will reduce your principal by as much as 50 to 70 percent. By doing this, they say, your monthly payments will drop dramatically. “That is virtually impossible under any circumstances,” says Travis Plunkett, Legislative Director of the Consumer Federation of America. That’s why CFA warns consumers not to use debt settlement programs. “They are promising something they can’t deliver,” Plunkett says.
Does this story sound familiar? If so, contact Seth Rosenberg of Smith & Rosenberg, PLLC or Mark Walters of Mark Walters Law, PLLC. They are the only attorneys in the State of Washington who will take on the debt settlement companies. Seth and Mark take cases on contingency and are only paid if you see the return of your money. Seth and Mark’s track record is truly impressive in seeing the return of your money. Act today to enforce your rights!