A Debt Settlement Company Offers to Help

 

 

 

by Alyssa Andrews

We all try to avoid debt. But sometimes, some of us can’t help piling it on and then we can easily slip further and further behind. That’s often when bad things happen.  Debt settlement companies somehow manage to find you, or you find them and they make promises they probably can’t keep to help eliminate your debt.

That’s why debt settlement and debt collection turned into big business and complaints about debt collectors tops the June 2015 Consumer Financial Protection Bureau‘s (CFPB) list of complaints.

And that tips you off about the need to take extra care when you step into an arrangement with a company that offers to reduce your debts.

A Texas Company called Nationwide Debt Direct did a mass mailing recently and one of their “credit card settlement” offers landed in a ConsumerMojo reader’s mailbox.

The letter urged: ‘DEBT SETTLEMENT NOTICE: PLEASE READ ENTIRE DOCUMENT CAREFULLY.”

That sounded scary and the man, we’ll call him Alan, wondered if he had a problem.  The letter started off.

“Our records indicate that you have not responded to our previous attempt to notify you of your eligibility.”

Alan said, “I never received anything from this company before and I didn’t know what they were talking about. So I continued to read the letter and realized they were trying to get me to sign up to some kind of program that I don’t need.”

Good for Alan.

Michelle Styczynski, a research advocate with the Consumer Federation of America, suggests that a careful reading of the letter sent by this company raises red flags.

Nationwide Debt Direct said they can settle debt and save you money in one to three years.  Maybe, but Styczynski says, “One year is rather short to be completing a debt settlement program.”

She also takes issue with the sense of urgency they create by asking you to contact them within 10 days.

She told ConsumerMojo ” . . . that makes it appear they are addressing an urgent issue. A consumer may mistake this for a notice from someone else, such as a creditor or collection agency.”

And then we have the small matter of wondering who this letter came from. A big bank, a well-known company? No.

Styczynski says, “The name of the company is hidden at the bottom, which takes time to find. This may make it difficult for a consumer to identify what they’re reading.”

WHAT YOU NEED TO KNOW

The Federal Trade Commission says that it is illegal for companies to misrepresent debt relief services. Some examples of these might be:

  • The amount of money or percentage of the debt someone may save using the service.
  • The amount of time necessary to get results.
  • The effect of the service on someone’s credit.
  • The effect of the service on the collection efforts of any credit/debt collectors.
  • The percentage/number of people who have gotten great results.
  • Whether the business operates for profit.

It is also illegal for companies to contact you via letter, email or robocall about debt settlement services. If a company sends you a letter, email or makes a robocall about debt relief services, you do not have to sign up or contact them.

FIND OUT MORE

To find out more information about how to avoid certain debt settlement companies, there is more information here.

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