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:
The FTC has prosecuted more than a dozen companies that claimed to offer debt relief but lied about the cost or nature of their services. One of its biggest cases involved AmeriDebt, Inc., a company that claimed to be a non-profit credit counseling organization. The FTC alleged that the company funneled its profits to other people and affiliated for-profit entities, and deceived its customers about charging an up-front fee. The agency said that AmeriDebt kept its clients’ initial payment as a fee rather than making good on its promise to disburse the money to creditors. On the eve of the trial, AmeriDebt’s founder agreed to settle the case for $35 million.
Consequences (:15)
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Illegal Fees (:15)
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Payment Plan (:15)
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Government Program Scam (:15)
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No Guarantees (:15)
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Pennies on the Dollar (:30)
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