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Debt Relief Scam Reminds: Know Your Rights (and Do It Yourself)

January 31st, 2017 · No Comments · Debt Settlement

by Kristy Welsh

(Last Updated On: August 10, 2017)

Debt Relief Scam Reminds Know Your Rights (and Do It Yourself)

When you’re trying to repair your credit and struggling to pay your debts, help from a debt relief company sounds like a good thing. Unfortunately, there are far too many scammers out there making the financial situation of struggling consumers even worse – breaking their banks and breaking the law. Thankfully, the Consumer Financial Protection Bureau (CFPB) is there to help. Case in point, its recent action against an alleged debt relief scam through which the CFPB says lawyers were charging illegal upfront fees.

How This Debt Relief Scam Allegedly Worked

The CFPB says a ring of law firms and attorneys gave consumers two contracts to sign – one for debt settlement services and one for bankruptcy-related services. What’s strange about that is they provided both contracts to consumers who had no interest in bankruptcy. Why? Because it allowed them to get around the law.

Debt relief companies are prohibited from charging upfront fees for debt settlement services. According to the Telemarketing Sales Rule, they can only charge you once debt relief services have been provided. This law does not apply to bankruptcy-related services.

“The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” says CFPB Director Richard Cordray. “We put a stop to this scam once already, and we intend to do it again.”

(That’s right. The CFPB says some of the lawyers involved in this scam were part of a 2015 lawsuit that shut down the same kind of illegal operation.)

For these alleged violations, the CFPB is asking for relief to affected consumers and penalties.

Protecting Yourself from Debt Relief Scammers

The only surefire way to protect yourself from debt relief scammers is to settle your debts yourself. There is nothing a debt relief company can do for you that you cannot do for yourself. No clue how to go about it? We know how and we share everything you need to know in our DIY debt settlement articles.

Plus, even if you’re dealing with a legitimate debt relief company, it’s still expensive – that’s money you could be putting toward your debts instead.

That said, if you do decide to pay a debt relief company to help you, know your rights and do your homework. Avoid any company that asks for upfront fees.

Google them, too, and look for reviews – on Yelp and through the Better Business Bureau. And if at any time you believe your rights are being violated, submit a complaint to the CFPB.

Learn more about settling debts on your own.

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