IS THERE A GOVERNMENT PROGRAM THAT GIVES YOU THE RIGHT TO SETTLE YOUR CREDIT CARD DEBTS?

If you watch late night TV or listen to talk radio, you may have heard ads claiming there is a new government program that gives you a right to settle your credit card debts for a fraction of the balance. I am often asked if this is really true.

While there are reputable debt settlement companies, there is no legitimate program that can “guarantee” or “gives you the right” to settle your personal credit card debts for pennies on the dollar. There are usually signs you can look for to determine if a company is offering a benefit or is just a scam.

Based on the advice of the Federal Trade Commission, you should always avoid doing business with a company that promises to settle your debt if the company:

• charges any fees before it settles your debts
• touts a “new government program” to bail out personal credit card debt
• guarantees it can make your unsecured debt go away
• tells you to stop communicating with your creditors, but doesn’t explain the serious consequences
• tells you it can stop all debt collection calls and lawsuits
• guarantees that your unsecured debts can be paid off for pennies on the dollar

Unfortunately, our office has helped many people after they fell victim to questionable debt settlement programs. The stories they tell are similar. They pay money to a company to settle a debt, they are told to stop making payments to the creditor, the company tells them they could not reach a settlement with the creditor, and the fees they already paid covers their costs and fees. Instead of things getting better, they are worse off. They are further behind on the debt, their credit score takes a big hit, they lost the money paid to the company, and a collection lawsuit is filed.

If you have debts and are considering enrolling in a debt management program, feel free to contact our office for advice before you commit to the program.