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There are numerous debt relief companies out there, each promising to help you solve your debt problems. However, not all debt relief companies are equal, and some are outright scams. In this article, we will discuss the worst debt relief companies and how to avoid falling victim to them.
Debt relief companies promise to help you reduce your debts, negotiate with creditors, and avoid bankruptcy. However, some of them charge exorbitant fees and fail to deliver on their promises. Others might even hurt your credit score and leave you worse off than before.
Here are five of the worst debt relief companies you should avoid:
1. Freedom Debt Relief
Freedom Debt Relief is a debt settlement company that promises to help you settle your debts for less than what you owe. However, the company charges high fees of up to 25% of your total enrolled debt. That means if you owe $30,000, you could end up paying $7,500 in fees alone.
Freedom Debt Relief also does not guarantee any results and might take up to four years to settle your debts. During that time, you will have to stop making payments to your creditors, which can hurt your credit score.
2. National Debt Relief
National Debt Relief is another debt settlement company that promises to help you reduce your debts. However, the company charges high fees of up to 25% of your total enrolled debt, just like Freedom Debt Relief. National Debt Relief also does not offer any guarantees and might take up to four years to settle your debts.
National Debt Relief also requires you to make monthly payments to a separate account, which they will use to settle your debts. However, the company charges a monthly servicing fee of up to $30, which can add up over time.
3. Debtmerica Relief
Debtmerica Relief is a debt settlement company that claims to negotiate with creditors on your behalf and help you reduce your debts. However, the company charges high fees of up to 25% of your total enrolled debt, just like Freedom Debt Relief and National Debt Relief.
Debtmerica Relief also does not have a good reputation, with numerous complaints from clients about unresponsive customer service and poor communication.
4. ClearOne Advantage
ClearOne Advantage is a debt settlement company that promises to help you settle your debts for less than what you owe. However, the company charges high fees of up to 20% of your total enrolled debt.
ClearOne Advantage also requires you to stop making payments to your creditors, which can hurt your credit score. The company also does not guarantee any results and might take up to four years to settle your debts.
5. Debt Relief A La Carte
Debt Relief A La Carte is a debt settlement company that charges a flat fee of $995 to negotiate with your creditors on your behalf. However, the company does not have a good reputation, with numerous complaints from clients about poor communication and lack of results.
Debt Relief A La Carte also requires you to stop making payments to your creditors, which can hurt your credit score. The company also does not guarantee any results.
How to Avoid Falling Victim to Bad Debt Relief Companies
Here are some tips on how to avoid falling victim to bad debt relief companies:
1. Do Your Research
Before working with any debt relief company, do your research. Check their reviews on websites like the Better Business Bureau, the Federal Trade Commission, and Trustpilot. Read what other clients have to say about their experience with the company.
2. Check Their Fees
Make sure you understand how much the company charges and what you will get in return. Avoid companies that charge high fees or require upfront payments.
3. Verify Their Credentials
Verify that the company is licensed and registered to operate in your state. Check with the state’s Attorney General office, the Department of Banking, or the Department of Consumer Affairs.
4. Avoid Companies That Promise Too Much
Avoid companies that promise to eliminate your debts or guarantee results. No debt relief company can make such promises, as results depend on each individual case.
5. Check Their Communication
Make sure the company has good communication skills and provides regular updates on your case. Avoid companies that are hard to reach or unresponsive.
Frequently Asked Questions
1. Are debt relief companies a scam?
Not all debt relief companies are scams, but some are. Always do your research before working with a debt relief company and avoid those that have numerous complaints or poor reviews.
2. How do debt relief companies work?
Debt relief companies work by negotiating with your creditors on your behalf to help you reduce your debts. They might also help you create a debt management plan or file for bankruptcy.
3. How much do debt relief companies charge?
Debt relief companies charge different fees, but most charge a percentage of your total enrolled debt. Avoid companies that charge high fees or require upfront payments.
4. Will working with a debt relief company hurt my credit score?
Working with a debt relief company might hurt your credit score, as you will have to stop making payments to your creditors. However, if the company can help you reduce your debts and pay them off, your credit score will eventually improve.
5. Can I negotiate with my creditors myself?
Yes, you can negotiate with your creditors yourself, but it might be challenging if you don’t have experience. Debt relief companies might have more leverage and better communication skills, making it easier for them to negotiate on your behalf.
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Article Summary:
There are numerous debt relief companies out there, promising to help you solve your debt problems. However, not all debt relief companies are equal, and some are outright scams. Some of the companies charge exorbitant fees and might hurt your credit score, leaving you worse off than before. In this article, the five worst debt relief companies are discussed, along with tips on how to avoid falling victim to them. Before working with any debt relief company, you should do your research, check their fees, verify their credentials, avoid companies that promise too much, and check their communication.
