What are teh Federal Trade Commission's Warnings Against Debt Relief Services?

Take a look at the FTC’s introduction to settling credit card debt:

If you’ve maxed out your credit cards and are getting deeper in debt, chances are you’re feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce – or even erase – your debt for pennies on the dollar. Sounds like the answer to your problems, right?

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.”

SOURCE: https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt

Pretty spot on to DebtClear’s mission, right? The only difference is that with DebtClear you’re spending next to nothing to negotiate your own debts.

But more than added cost, all debt relief services present major dangers. The list below is just a few of the ones the Federal Trade Commission mentions:

Debt Settlement Company Dangers:

1. “These programs often require that you deposit money in a special savings account for 36 months or more before all your debts will be settled. Many people have trouble making these payments long enough to get all (or even some) of their debts settled. They drop out the programs as a result.”

In a nutshell: No matter what these services promise you, every promise will only have a good chance to come true if you complete the program fully – which is unlikely to happen. A study by a group called The Association of Settlement Companies showed OVER HALF(50-55%) of people drop out. Which means they get all the cons of the program, like credit score droppage, with little to no debt relief.

2.“Debt settlement companies also often try to negotiate smaller debts first, leaving interest and fees on large debts to grow.”

In a nutshell: Debt settlement companies could ignore your largest accounts, meaning you’ll owe more in the long run.

3. “Your debts may continue to accrue late fees and penalties that can put you further in the hole. You also may get calls from your creditors or debt collectors requesting repayment. You could even be sued for repayment. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.

In a nutshell: Debt settlement services can hang you out to dry. This puts your money, properties, job and livelihood in danger. 

SOURCE: https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt

Outside of debt settlement services, there are two other debt relief services that you may have heard of, credit counseling and debt management.

The danger for these companies is two-fold. The first reason is some of them are non-profits that still screw you over. (More on that below)

The second reason is that completion rates are nearly 1 out of 10, yet most charge clients fees before even doing anything for them.

Let’s dive into what the Federal Trade Commission has to say…

Credit Couseling and Debt Management Dangers

If you’ve maxed out your credit cards and are getting deeper in debt, chances are you’re feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce – or even erase – your debt for pennies on the dollar. Sounds like the answer to your problems, right?

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.”

In a nutshell: Whether a credit counseling agency is non-profit doesn’t matter much. Fees are fees and they will charge you, regardless if you get any debt relief. Oftentimes their employees get paid more for getting folks to sign up for expensive services. This makes them no different than salesmen trying to get your money, and manipulating you to do it. Does that sound like how a “Non-Profit” company should act?Plus, the study from The Association of Settlement Companies showed:

“The National Foundation for Credit Counseling reported completion rate of credit counseling companies at 21%.”

This means that a group of even ‘the most legitimate’ non-profit credit counseling agencies still had a failure rate of 4 out of 5. 

What does that mean for the clients? They could pay service fees for months or years but if they don’t complete the program, they walk away with LITTLE or NO RELIEF, and potentially at a loss of $1,000s because of service fees.

Here at DebtClear, there is nothing to hide. There is no chance of a scam because you are the one in charge of your own debt relief. Who do you trust with your money more than yourself?