If you are struggling to pay your bills, working with a debt consolidation company to negotiate a single, lower monthly payment may seem like a great option.
And sometimes it is. Consolidating your debt and negotiating a lower monthly payment — or even a lower balance — can be a great way to take control of your finances.
At Hanson & Payne, LLC, we advise many clients in the Milwaukee area who have questions about their debt relief options. Over the years, we have become good at spotting scammers posing as debt consolidation or credit repair companies.
Red Flags To Look Out For
These are eight red flags that may indicate a debt relief company is actually just a scam:
1. A debt relief company that demands a large upfront payment before it will do any work on your behalf. Many times these so-called “advisers” will take your money and run.
2. Companies or advisors that want your credit card or bank account information before they will explain what sort of work they can do on your behalf. These scammers will clean out your accounts or rack up more debt in your name if you are not careful.
3. Companies or advisors that ask you to fill out a third-party authorization form or power of attorney document. Be wary of giving another person the legal authority to make financial decisions on your behalf.
4. A debt relief company that guarantees it can eliminate or reduce your debt in a very specific period of time. There is no set timetable for this sort of work. It is often very time consuming, and success cannot be guaranteed.
5. Advisers that tell you to cut off communication with your creditors. This should only be done after you have started to work with a bankruptcy attorney, who will talk to your creditors on your behalf.
6. Using high-pressure sales tactics to make it seem like you will miss out on an opportunity if you don’t agree to work with them right away. Financial decisions should always be made with care, so there is no reason to rush. Take your time to research any company that offers to work with you.
7. Companies with pompous sounding names that send you letters with fancy seals and logos. If a company seems like it is trying too hard to seem legitimate, there may be a reason why.
8. Websites, letters, emails, or texts with spelling or grammatical errors throughout them can indicate the person who wrote them is a scammer. Scammers are getting good at using AI to craft convincing sales pitches, so this is not as common as it once was. But if you see these sorts of errors, be wary.
If someone uses one of the tactics above on you, you should consider reporting them to the Federal Trade Commission at ReportFraud.ftc.gov.
Finding The Right Kind of Debt Relief
In addition to watching out for these red flags, the best way to avoid getting scammed when looking for financial advice is to work with a certified financial planner, or seek credit counseling from one of the credit counselors approved by the bankruptcy court to serve debtors in the Eastern District of Wisconsin.
Working with a court-approved credit counselor has the added benefit of giving you a bit of a head start on the bankruptcy process if it turns out that bankruptcy is your best path forward. All personal bankruptcy filers are required to go through counseling before the bankruptcy court will hear their case.
Milwaukee Area Bankruptcy Attorneys You Can Trust
If it seems like bankruptcy may be the best option for you, or you have questions about bankruptcy, the Hanson & Payne team is here for you. We help Milwaukee area residents, businesses, and creditors navigate the bankruptcy system. Please contact us today to schedule an initial consultation.