Potential Bankruptcy Filers Beware: Common Debt Settlement Scams

TRI Writer • May 7, 2020

Debt, in itself, is not a bad thing, but when an individual or a family has more liability than they can handle, it can be scary. When debt reaches insurmountable levels, it can become an overriding and overwhelming concern. The situation only escalates when creditors become involved, particularly when the creditors’ involvement increases to the level of harassment. Individuals and families facing constant creditor harassment can become desperate for a solution to the problem. People in this situation are often targeted by “debt settlement companies,” promising to make the debt go away. Sadly, a lot of groups claiming to be debt settlement companies are running scams that can lead to even more problems for people buried in debt and seeking relief.

Bankruptcy Filers Beware: Is it a Debt Settlement Scam?

Consumers, and potential bankruptcy filers specifically, need to be aware that debt settlement companies that run scams are a threat. They promise the impossible: a debt-free life with little effort and little money required. After making these promises, they very rarely keep them. Once the consumer realizes the reality of the situation, it’s too late. The consumer already fell for the promise, and they may end up paying more than the total of their original debt.

Signs of Common Debt Settlement Scams:

There are signs consumers can look for that indicate a supposed debt settlement company may be committing fraud.

  • The first sign that a “debt settlement company” may be fraudulent is if the company encourages clients to default on current debts. When consumers take the advice of supposed debt settlement companies urging them to default on their obligations, the consumer can find themselves facing higher charges and fines. Purposefully defaulting is not typically an effective tactic, and it is not a solution to the problem.
  • Another sign that a debt settlement company is running a scam is if they ask for a high monthly service fee or a percentage of the money they already “saved” the consumer.
  • Also, watch for claims that the company can remove negative information from credit reports. Doing so is not possible, yet it is often used as a tempting lure to get unaware consumers on board with what they only later find out is a scam.

When the truth comes to light, and the consumer realizes the company they thought was helping them settle their debts was scamming them, the fraudulent debt settlement company usually ends up taking the person’s money and disappearing. In most cases, they disappear without taking any steps towards settling the individual’s debt.

If you know you need help getting out of debt, but you aren’t sure where to turn for help, contact the law office of Kenneth C. Rannick P.C. We can help you determine the best options in your situation. You don’t have to deal with the financial struggle alone. Bankruptcy can be an overwhelming process, but at the law offices of Kenneth C. Rannick P.C., you’ll work with Consumer Bankruptcy Specialists. We help relieve the stress, ensure all bankruptcy paperwork is appropriately filed, and work to expedite the bankruptcy process so you can get a fresh financial start.

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