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Debt relief pitches are not always what they seem

October 25, 2010 by · Leave a Comment 

Article by Robert Tikoyan of Business and Finance Net

The numbers of letters that come in the mail claiming that a person has been selected to be part of an exclusive debt relief option are not always what they appear to be. The recession has caused these companies to start doing a brisk business and to undergo heavier regulation by the Obama administration. The new rules protect consumers, but the buyer beware rule applies to this situation.


Even though the rules prevent the companies from collecting their own fees until they provide debt relief for the consumer, the companies often charge high fees or cannot offer the same amount of debt reduction the letters in the mail promise to prospective customers. Companies can also no longer put money into an account for debt relief unless the account is maintained at a third party institution.

The above rules apply to legitimate consumer debt relief agencies that operate on a for-profit basis. Even though the rules were put in place to prevent the abuses of the industry, there are still a number of companies that are fraudulent and do not offer legitimate services. A consumer may not always find out which ones are legitimate and which ones are not before the debt relief agency takes a consumer’s money. 

The Federal Trade Commission can help a consumer avoid legitimate companies, but the best bet is to avoid such conflicts in the future. The best way to avoid falling for debt relief scams is to not use the services. Non-profit consumer credit counseling agencies work just as well.

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