Debt buyers and debt collectors aren’t the only businesses up to no good in the debt collection industry. Here are a few scams that you should look out for if you’re ever hassled over a debt.
1)** *The Debt Elimination Company Who Will Tell You How to Resolve Your Debt*.For a Fee.
These types of companies promise to explain how to eliminate debt. Some offer various instruments, such as a *bond for discharge of debt* or a *redemption certificate*** that the debtor is to present to the creditor. You may as well hand the creditor a blank piece of paper, because those bonds and certificates are worthless, and their use may be a federal crime.
2) The Debt Settlement Company Who Wants You to Pay a Separate Account and Not the Creditor.
These companies take fees in advance as well as a percentage of each payment. They then hold those fees in an account until they reach a point where the creditor is willing to work out a negotiation with them. The only problem is that their fees are typically so high that the consumer never accumulates enough money. Creditors never get what*s allegedly owed to them, and the customer remains in debt. The only group that comes out on top in this scam are the debt settlement companies.
3) Other Scams
Those scams involving debt consolidation and home equity loans, payday and auto title loans. These tend to do nothing but sink the consumer deeper into debt. They are not a solution. That said, those who manage their monies appropriately could find an advantage in payday loan companies. This is especially true of subcontractors who often have to pay their workers cash at the end of the week.
One Final Note
One final note concerns all of these "credit repair" companies starting to pop up*over Facebook. For several reasons, they may be violating the the Credit Repair Organizations Act (CROA). If anyone promises you that he or she will lower your debt by a certain number of points, and then he or she requests*payment in advance, run. Except for legitimate non-profit organizations, no credit agency or even credit attorney, such as myself, is allowed to require payment before we complete the agreed upon work.
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