Debt settlement relief companies ignoring memo from government

A debt settlement relief company that offers the end of debt for pennies on the dollar is likely a scam. Image: MoneyBlogNewz/Flickr.com/CC-BY

In the last few years, there has been a growing number of debt settlement relief companies offering to get people out debt. Some of these companies are on the level, but many are not and the government put rules in place to prevent dishonest practices. Many of these companies have not gotten the memo.

Debt settlement relief companies grow like weeds

The last few years have seen a growing number of debt settlement relief companies that promise to get people out of debt quickly, and ask for upfront fees that would send most people running for payday loans. Often the fee is a percentage of the total debts. Not all of these companies are created equal, according to CNN. A lot of people have given a lot of instant cash to these companies, never hearing a peep on the progress of their debt consolidation, only to find debt levels had remained the same if not worse than before. That is why the Federal Trade Commission put new rules in place that prevent firms from doing so. However, a lot of companies haven’t gotten the memo.

Too good to be true

If a company can wipe some away for an upfront payment that doesn’t make a person desperate for loans for bad credit to stay afloat, it seems like a good idea. However, a lot of these companies don’t do a thing, and pocket the fee. One company, Elite Financial Services in Missouri, was caught absconding with huge amounts of advance cash from customers and doing nothing about their debts, according to the St. Louis Business Journal, and had to refund all customers in Missouri.

Be careful

Another practice is for a company to add a lawyer to its staff, and claim the company is then a law firm. Still others will move corporate charters to foreign countries to avoid U.S. jurisdiction. Consumers that get offers for debt relief should research the company the offer comes from thoroughly.