Debt Settlement Callers: Just Say No

The New York Times reported today on a case of what appears to be a huge debt settlement fraud, and offers BBB advice on what to do if you get a call from such a server. Here is part of the story by personal finance blogger Ann Carrns:women on phone large  150x150 Debt Settlement Callers: Just Say No

“It may sound like a solution: You are mired in debt and a telemarketer calls, offering to help reduce the amount you owe, in exchange for a fee.

But consumers should be very wary of such calls, said Claire Rosenzweig, president and chief executive of the Better Business Bureau of Metropolitan New York. “If someone just willy-nilly calls you and says they can reduce your debt, just don’t do it,” she said. The better choice is to hang up and do your own research about the legitimate resources that are available to help you,” she said. “Then, you can initiate your own call, once you are comfortable with an agency’s credentials.

Debt settlement firms typically offer to negotiate with creditors in exchange for a fee. But you can often do that yourself at no cost, she said, and in most cases, it makes sense to use the money you would pay to the settlement firm to pay down your debt directly.

Most settlement firms charge a fee, and some hold your money while they negotiate with creditors. But consumers’ credit ratings may suffer in the interim, and they may ultimately may wind up further in debt if the firm doesn’t follow through. In the worst case scenario, firms may take your money and do nothing.”

The U.S. attorney for the Southern District of New York announced an indictment against a New York company, Mission Settlement Agency, which currently has an F rating by BBB New York. The indictment charges the company with defrauding more then 1,200 New Yorkers by “failing to achieve any debt reduction whatsoever.” The case was referred by the Consumer Financial Protection Bureau, the first such criminal referral from the two-year-old federal office.

Read the whole story, including tips on how best to handle debt problems and links to helpful sites.

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About Katherine Hutt

Katherine R. Hutt, Director of Communications and Media Relations with the Council of Better Business Bureaus, is an award-winning communicator who has been helping nonprofit organizations tell their stories for the past 25 years. She was a CBBB consultant on numerous projects for more than a decade before joining the staff in 2011.