There are growing numbers of Canadians unable to pay off their constantly increasing debts, therefore, debt resolution options have become increasingly popular and in turn a high risk option. Hundreds of profitable to non profitable organizations, often operated by telemarketing companies, are selling the myth that they can magically reduce your interest rate on your debts and negotiate a more reasonable payment plan on your behalf. They offer debt management in exchange for falsely advertised “low fees”, usually causing more harm to your credit regardless of any negotiating tactics they may promise through the various forms of media or on the internet. Be weary of the often-conveyed message that they will “STOP” creditor harassment, especially if they try to convince you to stop any payment to said creditors in order to allow them to take over. These scheming companies will offer hope that your creditors will write off your debt and reclassify it as less collectible, and ultimately agree to settle for a greatly reduced amount. Once again, if they require you to stop paying your creditors and to start making payment to their company instead, you should most definitely reconsider.
WARNING SIGNS OF FRAUDULENT DEBT SOLUTIONS:
• They ask you to sign a contract or waiver granting their company full responsibility of managing all outstanding debts for repayment (usually between 2-5 years estimated time). By doing so, you are legally permitting these companies to manage your accounts, as a middleman, including any phone calls or documentation. You may be left in the dark in terms of the progression of your account, as you make monthly payments directly to them plus any additional service fees (these may vary depending on company). You will no longer be in direct contact with your creditors and therefore acting on blind faith that they are truly paying off your debt as described.• They charge high monthly fees for enrolling in credit counseling or debt management plans. These may sometimes be payable up front and often times there is no real form of counseling.
• They ask you to make “voluntary contributions” or declare themselves as non-profit organizations.
• They won’t send you free initial consultation information about the services they provide without requiring you to provide personal financial information, such as credit-card account numbers. They may also attempt to enroll you in a debt-management plan immediately without properly reviewing your financial situation.
• They demand that you make payments into a debt-management plan before your creditors have accepted you into the program. There are certain steps that need to be taken when requesting creditors to lower existing debts, in turn causing delays before a debt proposal is accepted. Any claims that these steps are not necessary are obviously attempts to scam you out of your money. REMEMBER THEY ARE ACCOUNTABLE TO NO ONE.
THE OUTCOME: A common result for clients in such debt settlement plans is that regardless of their efforts and payments, they continue to be harassed by creditors, allowing for fees and interest to accumulate as their accounts are treated as delinquent. Debts go to charge-off after 180 days and then to outside collection agencies, attorneys, or junk debt buyers who will eventually file lawsuits. Many files that are handled by above-mentioned debt specialists are seldom settled, allowing for clients’ credit to be further damaged or ruined, pushing many into bankruptcy. In the end, most of these clients end up with more debt, more problems, fighting to get refunds from scammers who will more than likely never respond. Consequences can be quite severe due to deceptive marketing, poor service and astounding fees, which define the nature of such companies. Regardless of how easy and less complicated it may seem shouldn’t your first step in researching your financial solutions be a meeting with a bankruptcy specialist. Contact us now for a no obligation, FREE consultation with a government certified DRUKER AND ASSOCIATES Trustee who can properly evaluate your situation. If your attempts at debt reduction fail, bankruptcy offers you a financial restart on life!
