Sarah Edwards | March 07, 2023
Summary: If you’re considering using a debt settlement company to help you get out of debt, make sure you don’t fall prey to a scam. If a debt settlement company has no online information, fails to provide a written contract of its services, encourages you to stop communicating with your creditors, tries to charge any upfront fees, or makes outrageous promises, there is a good chance it is a scam. You can avoid scams altogether when you settle debt on your own with the help of SoloSettle.
You’ve likely been on the receiving end of a robocall or phishing email, whether you realized it or not. These minor annoyances can lead to severe repercussions if you take further action, like signing up for their services or giving them access to your data.
However, consumers also have another type of scammer to look out for: fraudulent debt settlement companies.
A deceptive debt settlement company can take advantage of you in multiple ways. They might take your cash while making sweeping promises about eliminating your debt. In the worst cases, they’ll sell your personal information, including your Social Security number or phone number, to third-party marketers or other scammers.
If you’ve fallen on difficult financial times and are considering debt settlement, you’ll need to know how to find a trusted debt settlement service. In this article, we’ll discuss five signs of a debt settlement scam.
Let’s jump right in.
Most businesses aim to attract lots of customers, and they do so by advertising their company everywhere possible. They’ll have a fully-developed website complete with articles and blogs and plenty of ways to contact them. Most organizations also maintain some form of social media presence, like Facebook or YouTube.
When searching for a debt settlement company, channel your inner detective and do some research. Check out the Better Business Bureau (BBB) to confirm that the company has an active profile and make sure they don’t have any complaints with the FTC.
Carefully read any complaints or reviews about the company you find. Established businesses will usually have several hundred reviews. Don’t expect every review to be positive, but be wary of similar ongoing complaints that are unaddressed.
If you can’t find much information about the company online, something is amiss. In the best case, it’s a new organization finding its footing. In the worst case, it’s a fly-by-night collection of grifters that will steal your money or cause other problems.
The federal government has high standards for financial service organizations, including debt relief and consolidation companies. They must comply with specific regulations that prevent them from charging upfront fees for their services or making promises they can’t fulfill.
A legitimate debt settlement company will always comply with federal and state laws and provide an official contract outlining the terms and conditions of their services so that clients know what to expect.
If a debt settlement company doesn’t provide you with a comprehensive contract of its services, consider it a red flag that the organization may not be legitimate. Don’t send any money to them until you have a complete agreement that describes how they’ll handle your debt settlements.
No legitimate debt settlement company will ask you to stop communicating with creditors. If they do, you’re setting yourself up for a potential disaster. You should continue to receive statements and updates from your creditors, even when you’re in a debt settlement program.
If a debt settlement company tells you to change your contact details to their address, they’re most likely running a debt settlement scam. If your creditors can’t reach you, they may initiate a legal process against you, which can be devastating, especially if you’re unaware.
Continue opening your mail and take action if a creditor decides to sue you during the settlement process. That way, you’ll avoid a potential legal judgment.
No debt settlement company offers free services, but it’s against FTC rules for them to charge you any upfront fees for their debt settlement efforts. The company can only implement a fee for each debt as they settle them, not all at once. They also can’t charge you any money if you quit the program before they settle a debt.
If a debt settlement company informs you that you’ll need to make a one-time payment before they can begin servicing your account, it’s not legitimate. Don’t enroll in their program, and report the company to the FTC so they can investigate the matter.
Let’s be realistic: while you can save money through debt settlement, you’re unlikely to walk away without paying at least 50% of the total value of your outstanding debt. If a company tells you that they can settle your debts for 5%–10% of their value or that they have access to special programs to eliminate your debt, they’re playing you.
Do your homework to understand how the debt settlement process works. That way, you’ll be able to tell when a company is promising you an outcome that isn’t realistic. Stay away from companies that tell you that they can settle debts for pennies on the dollar or that they have a unique relationship with your creditors.
Now, for the sake of illustration, let's explore an example of how to spot a debt settlement scam.
Example: Joseph needs help getting out of debt. He comes across Free From Debt, a debt settlement agency that settles obligations for less than their original value. Free From Debt promises Joseph to help him settle his debts for just 5% of their original value. It seems too good to be true, but in order to enroll in the program, Joseph must pay $1,000. After looking up the company online, Joseph finds several pages and reviews claiming.
Before jumping into a debt settlement program, you’ll want to make sure you understand what to expect and are comfortable with the company you work with.
By treating debt settlement as a significant decision that can impact your financial situation for the next few years, you can avoid falling prey to a company seeking to take advantage of you.
Is a creditor suing you for a debt? Find out how you can settle your account with the help of SoloSettle.
You can avoid working with a debt settlement company altogether and opt to take matters into your own hands. SoloSettle can help you settle your own debts once and for all.
As a tech-based approach to debt settlement, SoloSettle helps consumers send their own settlement offers to creditors and debt collectors until they reach an agreement.
The process usually involves several rounds of negotiations before an agreement is reached, but most consumers find they can save hundreds—if not thousands—with the help of SoloSettle.
Check out this review from a real SoloSettle customer:
“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
To learn more about how to settle your own debt, and how SoloSettle can help, check out this video:
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather