In a recent report by the Federal Bank of New York it was stated that the American economy is dangerously if not fatally over leveraged. This means that people are borrowing just too much and for about anything that they can’t afford.
Such an over leveraged economy directly means one thing; there will be a lot of people in debt. And some of them won’t be able to manage their debts.
You’ll be surprised to know just how many people are not able to repay their debts. As a result of so many people facing financially estranged times, a new set of financial services has emerged in the market. These financial services are better known as Debt Relief services. Some of these services are genuinely targeted at helping those who are having difficulties with their debts. But most of such services claiming to provide instant debt relief are nothing but scams. Such debt relief scams primarily target those consumers who have significant credit card debt.
The false promise of debt relief services:
Someone who is under a huge pile of credit card debt is always looking for options to escape from his financially estranged condition. Debt relief service companies take advantage of this situation and approach the consumers with false promises. It is common for such companies to promise their clients that they will negotiate with the creditors on their behalf and will settle or reduce their existing debt. This is same as luring a fish with a plastic worm. At times, consumers are so frustrated and worried that they blindly trust these companies and fall prey to their ill intentions.
Huge upfront fee:
The main objective of such sham companies is just to extract as much money as possible. They keep on making promises but never deliver. Such companies often ask their clients to deposit huge upfront fee. Once the client deposits this large amount of money in their account, they start to roll back on their promises.
Sharing of information:
It seems as such sham companies have some sought of network. Once you fall prey to one of these companies, they share your information with other similar debt relief companies. As a result you start getting phone calls and emails from other companies making even taller but dubious claims. Often it has been reported that even those consumers who were on a Do-Not-Call List received multiple phone calls from debt relief services. As a smart consumer you must sense their urgency to trap you and not respond to such phone calls and emails.
Auto loan modification scams:
The number of people who take loan for buying a car increased significantly during the last five years. As a result some debt relief companies came forward claiming that they specialized in auto loan modification and settlement.
Credit repair scams:
You must understand that there is nothing called credit repair service. It’s a fake service that promises you to make corrections in your credit statement. Please note that it is illegal for any third party to make any modifications to the credit statements.