Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with local consumer protection agency or the Better Business Bureau in the company’s location.
Ads promising debt relief may really be offering bankruptcy.
Whether your debt dilemma is the result of an illness, unemployment or overspending, it can seem overwhelming. In your effort to gain relief, it’s important to be on the lookout for advertisements that offer seemingly quick fixes. And read between the lines when faced with ads in newspapers, magazines or even telephone directories that say:
- Consolidate your bills into one monthly payment without borrowing!
- STOP credit harassment, foreclosures, repossessions tax levies, and garnishments!
- Keep Your Property!
- Wipe out your debts! Consolidate your bills! How? By using the protection and assistance provided by federal low. For once, let the law work for you!
According to the Federal Trade Commission, while these ads pitch the promise of debt relief, they rarely say that the relief they are talking about is bankruptcy. Although bankruptcy is an option to deal with financial problems, it’s generally considered the option of last resort. A bankruptcy has a long-term negative impact on your credit worthiness; it stays on your credit report for 10 years. It can hinder your ability to get credit, a place to live, insurance, a job. It can also cost you attorneys’ fees.
Advance-fee loan scams
Consumers with bad credit problems or those with no credit are often the targets of advance-fee loan scams. In exchange for an up-front fee, these companies “guarantee” that applicants will get the credit they want – usually a credit card or a personal loan.
The up-front fee may be as high as several hundred dollars. These advance-fee loan guarantees may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages through telemarketing; they require an application fee or appraisal fee in advance. But legitimate creditors never guarantee in advance that you’ll get the loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you’ve received the loan.
Hang up on anyone who calls you on the telephone and says they can guarantee you will get a loan if you pay in advance. It’s against the law.
Here are some tips to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:
- Most legitimate lenders will not “guarantee” that you will get a loan or a credit card before you apply, especially if you have bad credit or a bankruptcy.
- It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.
- Never give your credit card account number, bank account information, or Social Security number out over the telephone unless you are familiar with the company and know why the information is necessary.