Debt Relief Services Podcast Transcript
Welcome to the Informed Consumer, providing the latest tips and tools to assist consumers in making informed decisions, from the Fairfax County Consumer Affairs Branch.
Today’s topic: Debt Relief Services.
If you’ve maxed out your credit cards and don’t know how you’re going to pay off your debts, you may think that a company that promises to erase the debt for pennies on the dollar is the answer to your prayers. Not true! Debt negotiation can be risky, and it can have serious, long-term consequences for your credit report and your ability to get credit in the future.
If you get a sales pitch from a debt relief firm, pay attention to the details.
Stay away from any company that:
1. Promises that unsecured debts can be paid off for pennies on the dollar.
Truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet is to always contact your creditor directly as soon as you are having problems making payments.
2. Requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you.
Truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee – a percentage of the money you’ve supposedly saved.
3. Tells you to stop making payments to or communicating with your creditors.
Truth is that if you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score will also be hurt by not making payments.
4. Claims that creditors never sue people for not paying their unsecured debts.
Truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
5. Claims that they can remove accurate negative information from your credit report.
Truth is that no company or person can remove negative information from your credit report that is accurate and timely. It’s illegal.
Thanks for listening to the Informed Consumer. For more information on this topic or if you feel that you’ve been a victim of a scam, please contact the Consumer Affairs Branch at 703-222-8435 or visit our web site at www.fairfaxcounty.gov/consumer. Informed Consumer is produced by the Fairfax County, Virginia, government.