Thanks for watching our TikTok video covering debt relief scams. Did you sign up for a debt relief program, and do not know whether it’s a scam or a legitimate debt relief company?

You are not alone.

Many individuals sign up for programs that promise an easier way out of debt, just to end up in a worse position in debt relief companies.

Unfortunately, scam debt relief companies often use social media platforms and direct mailers to pitch product ideas that meet one of the following criteria.

1. You are offered something that is too good to be true (i.e. A “new” government program where your debt is forgiven with no impact).
2. You are fearful of the consequences if you don’t sign up (i.e. if you don’t sign up for this debt relief, you will get sued).

We will cover those in greater detail, but let’s ask the most pressing question.

1. Did You Fall Victim To The Scam?

It can be difficult to know whether the company you may have signed up with to take care of your debt is a debt scam.

Let’s now discuss how debt relief scammers operate.

2. How Debt Relief Scammers Operate

We mentioned that debt relief scammers often prey on those who have a difficult time paying their debt or use scare tactics to push you to make a decision. Let’s go through some examples.

1) Debt Consolidation Scam (Too Good To Be True)

Let’s say you have a high debt to income ratio and declining credit score, and are living check to check and suddenly get a debt consolidation letter that promises that you pre-qualify for debt consolidation with an interest rate of 3%.

You wonder how you would be able to qualify given your situation, but you decide to apply.

After applying, you find out you do not qualify for a debt consolidation loan, but you actually do still qualify for debt consolidation. What they don’t mention is that it’s not a loan, but a debt consolidation program. To add to this, these types of companies may use credit reporting data to target people they know would not qualify for a loan.

Debt consolidation programs ARE NOT debt consolidation loans.

Debt consolidation programs are also called debt settlement, debt reduction, debt negotiation or debt relief programs. In a debt consolidation program, your debt falls behind and the company tries to negotiate for a lesser balance after your credit score has been negatively impacted.

Now, there are legitimate companies providing these services, but if you are receiving a deceptive mailer, I would question the ethics behind a company.

2) Scare Tactics

Some companies use scare tactics to get you to call. Examples of this include language that may include:

1. Failure to notice language

2. You need to respond quickly or an event happens

3. Negative outcomes that could happen if you don’t call, such as your debt will accumulate more interest or your credit score will be impacted.

These types of companies could be just marketing shell companies that get you to call then will actually just enroll you in a debt consolidation program with an entirely different company. It seems that these deceptive marketing companies may do this to protect the parent company of unethical marketing practices.

3. How to Cancel a Debt Relief Scam

Thankfully, you have options to cancel a debt relief scam. We wrote an entire guide covering how to cancel a debt relief contract.

Hopefully, the company provided some sort of agreement about when they will remove funds from your account each month. If this is the case, the company should have a cancellation clause on how to cancel the program.

If you have not gotten anything in writing, you may have to call your bank and make sure it does not allow the funds to be taken from the debt relief scam.

4. Legitimate Options to Resolve Your Debt

If you’ve fallen victim to a debt relief scam, you still have options. Hopefully this article helped you determine whether you may have fallen victim to a scam. If you have, hopefully the following debt relief options and costs calculator can help you understand your options to get out of the scam.

The free debt relief calculator below helps you compare debt relief to debt management to debt payoff planning to bankruptcy to provide a holistic view of your options.