Avoid These 5 Common Debt Relief Scams

1. Debt consolidation schemes

Debt consolidation schemes typically involve transferring all of your debts to a new loan with a lower interest rate. While this may seem like a good solution, it’s important to be aware that these loans often have high fees and interest rates. Furthermore, they can put you even further into debt if you’re not careful. The Consumer Financial Protection Bureau recommends using extreme caution when taking out a debt consolidation loan, as these are often scams that are attempting to take advantage of your financial situation. If you find yourself thinking about taking out one of these loans, seek legal advice first.

2. Credit repair companies

Credit repair companies advertise that they can fix your credit and remove blemishes from your report. While this may sound like a quick fix to your financial problems, it’s likely to cost you in the long run. These companies take advantage of people looking for a quick solution by charging large fees up front that only worsen the problem. If you want to improve your credit score, it’s best to do it yourself by monitoring your credit report and taking steps to improve your credit history.

3. Debt settlement companies

Debt settlement companies promise to help you get out of debt by negotiating with your creditors. While this may seem like a good solution, it’s important to be aware that these companies often charge large fees and can damage your credit score. In addition, many of these companies are scams that will take your money and run. Make sure to check their legitimacy and do your own research.

4. Fake charities

Fake charities often use high-pressure tactics to convince people to donate money to their cause. People are often hesitant to donate when they encounter these types of charities, especially if the person asking for donations isn’t wearing a nametag or something else that identifies them as being affiliated with the charity. Before you give your money to any charity, make sure it is legitimate by checking its online presence and contacting the Better Business Bureau.

5. Advanced fee loans

Advance fee loans are a type of loan in which you have to pay a fee before you receive the money. These loans often have high-interest rates and fees and are a common scam. If you’re in need of a loan, it’s best to find one with reasonable interest rates and low fees.

Avoid these debt relief scams by doing your research on the company before making any payments. If you’re using a debt consolidation service, credit repair service, debt settlement service, or are dealing with a fake charity, it’s important to take steps to protect yourself from being scammed.