Here’s the Catch: When you’re drowning in debt, a call from someone offering to reduce the amount you owe or eliminate it altogether could sound like a lifesaver. However, far too often the people behind these debt relief services oversell and under deliver. Some are outright crooks only looking to make money off of distressed consumers. If you have to pay before receiving the service, that is a clear sign to walk away.
Helping America Group (HAG), a scam outfit based in Florida, along with 11 affiliates, tricked debt-ridden individuals into paying hundreds or thousands of dollars monthly to have their debts settled or dismissed and their credit improved. Unfortunately, the consumers only ended up in more debt because the fraudsters were not paying, negotiating, or settling any debts. Some individuals were sued by their creditors and some had to file for bankruptcy.
Consumers who complained to Business Consumer Alliance about F-rated HAG allege the company simply took their money and did nothing. One consumer paid HAG approximately $4,800 over the course of a year to have his debt negotiated. After finding out that there would be no debt reduction and that his creditors would not even work with HAG, he stopped the $400 a month payments and asked for a refund. The consumer had just lost his job and, since HAG had done nothing, wanted to use the money to pay some debts. HAG denied the refund request and failed to even respond to the complaint.
In May 2017, the Federal Trade Commission and State of Florida stepped in to shut down the fraudulent debt relief company. In their complaint, the agencies allege the company not only bilked consumers out of their money with phony debt relief offers, they lied about being a non-profit organization and promised consumers guaranteed debt consolidation loans for tens of thousands of dollars with enticing interest rates and considerably lower monthly payments than consumers were paying to their creditors. HAG would immediately charge a processing fee to the consumers’ account and continue to take monthly payments ranging from $200 to $1,000 or more, but never provided the promised loans.
The crooks even took it a step further by contacting individuals that were already enrolled in a debt relief program claiming they were taking over the servicing of these accounts. HAG convinced consumers to transfer money to them that they had saved up in escrow accounts with their debt relief providers and then deducted $1,000 monthly payments from them. Sadly, the consumers ended up with nothing in return except more debt.
Sorry to say, but these situations happen far too often when debt relief companies are involved. But how can someone in debt identify a scam?
Kim’s Advice: As I mentioned earlier, one clear sign that you are dealing with a scam debt relief company is if they require you to pay up-front. This is illegal. Other signs of a scam are:
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Guarantees to make debts disappear.
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Promises to stop collection calls and lawsuits.
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Refusal to provide information about the program unless the consumer provides financial or personal information, such as credit card information.
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Claims that they have special access to government assistance programs.
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Telling consumers to stop paying their creditors without explaining the consequences of doing so, such as damage to credit, lawsuits, etc.
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Pressure to sign up or pay before having the chance to look over and thoroughly check out the offer.
If you find yourself in debt and having trouble keeping up with monthly bills, there are options. The first thing you want to do is contact your creditor directly for assistance. They may offer payment options and work with you to make the debt affordable. Credit counseling organizations offer information and advice on managing your debt and offer free materials and workshops. Debt management plans are also an option to help cope with debt. Under these programs you make monthly deposits to a credit counseling organization and they use the money to pay your unsecured debts according to a payment schedule that is set up with you and your creditors. Another option may be to consider declaring bankruptcy. For more information on debt relief alternatives, visit BCA’s Resource Guide Debt Settlement and Debt Negotiation