It’s no secret that debt—particularly credit card debt—is a major problem for millions of people. In the U.S., the amount of total credit card debt that is not paid in full each month is estimated at $542 billion. About 122 million Americans carry credit card debt—and 14 percent of consumers have credit card balances above $10,000.1
As interest rates rise, and medical, housing, utility and other costs of living continue to escalate, more Americans are looking for some debt help. If you’re one of them, you may have heard that debt relief companies, like Freedom Debt Relief, can offer lower payments and help resolve your debt. A part of you may hope the claims are true, but there’s also probably a part of you that is skeptical—and that’s a good thing.
You owe it to yourself to get educated about debt relief; an often-misunderstood solution that helps thousands of clients put debt behind them. Learn what to look for in a provider, and what to avoid.
What is a Debt Relief Company?
Part of the confusion is that the term “debt relief” can mean different things. For Freedom Debt Relief, it means debt settlement (also known as debt negotiation or debt resolution). Our debt settlement program, which we have been providing since 2002, is an effective alternative to other debt solutions like credit counseling, debt consolidation and bankruptcy.
Once a client enrolls our debt relief program, we negotiate directly with their creditors on their behalf to reduce, as much as possible, the amount of principal our clients must repay on unsecured (primarily credit card) debt balances. By reducing how much they owe, we could help clients who are dealing with $10,000 or more in debt resolve their debt in as little as two to five years.
Before you entrust your financial future to any debt relief company, it’s extremely important to be confident that you will be working with a credible provider.
Before you entrust your financial future to Freedom Debt Relief or any other debt relief company it’s extremely important to be confident that you will be working with a credible provider. That’s easier to do now than in the past. Back in 2010, after an early boom in the debt relief industry where some companies were not acting with their clients’ best interests at heart, the Federal Trade Commission (FTC) stepped in. They worked with consumers and reputable debt relief companies like Freedom Debt Relief to implement stronger debt relief regulations that protect consumers from predatory businesses. Also during this time, the American Fair Credit Council (AFCC) formed as a trade association dedicated to ensuring the highest level of compliance and transparency. Freedom Debt Relief is accredited by the AFCC, meaning that we meet certification criteria by adhering to industry best practices and the highest levels of operational compliance.
As a result of these changes, many less-credible companies left the industry. Yet, as in any industry, there are still some bad apples. Protect yourself by doing your research before hiring a debt settlement provider. If you have questions, any company should be open and happy to give you the answers you seek. If a company avoids answering your questions, consider that your first red flag.
Signs of a Scam
When doing your research, beware of the following red flags. Any of these may be a sign of a company that does not have the consumer’s best interests at heart. Watch out for companies that:
- Charge fees before they settle debt.
The FTC rules include an advance-fee ban.This rule prohibits a debt relief company from collecting any fees until after it has negotiated a settlement and the customer has accepted that settlement. Companies cannot earn revenue until they do what they’ve promised. This rule means you can be sure that reputable debt relief businesses must maintain the highest level of customer service and conduct efficient and effective negotiations with creditors—good news for consumers.
- Say they can settle all of your debts for a single, promised reduction.
The debt settlement process involves negotiating each client’s debt with each creditor. Depending on the amount, the creditor and the individual situation, each settlement may be different.
- Tout a “government program” to erase credit card debt.
No such programs exist.
- “Guarantee” to make all your debt go away.
Some questionable companies promise that you’ll pay off your debts “for pennies on the dollar.” As with many things in life, there are no guarantees. A reputable debt settlement company has the motivation to work hard and get the best results possible for clients. In talking with a company, ask for results it has obtained for clients. A reputable company will be open and honest about its process and results.
- Claim to be able to stop all debt collection calls and lawsuits.
The early stages of the debt settlement process can be challenging. The program requires enrolled credit accounts to go past due. Creditors may respond by calling frequently, or even threatening (or filing) lawsuits. Good debt settlement companies guide you through the process and help you with any issues or concerns. They do not claim that they can prevent legal action or collector calls.
- Tell you to stop communicating with creditors.
It’s easy for a company to tell you not to communicate with creditors. But stopping all communications may not always be in your best interest. A reputable company leaves that decision to you. They offer tools and advice on asking creditors to communicate only with the debt relief company. They also provide information on how to best handle any conversations you do choose to have with creditors.
- Have only vague answers to your questions.
Reputable debt settlement businesses will be upfront about fees, counsel you on the possible challenges of the process, and tell you how long the process might take.
At Freedom Debt Relief, we want you to get all the answers you need to help you tackle your debt. We’re proud of the work we do, and we want clients to be confident before they commit to the process. We’ll answer any questions you have, any time.
Feel free to call us today at 800-230-1553 for a no-obligation debt consultation. You’ll be able to speak with a Certified Debt Consultant—a professional who has expertise in a variety of debt solutions, and who can answer questions about many debt relief options and programs. Our goal is to help you feel confident about the next step you take in solving your debt problem, even if it’s not our program.