Debt Relief and Credit Repair Scams (2024)

FAQs

Is the debt relief program legit? ›

If a debt relief organization you're considering demands upfront payment, guarantees to settle your debts for a fraction of what you owe, refuses to send free information about its services, or promises to stop all debt collection calls and lawsuits, steer clear. Those are red flags that indicate a possible scam.

Never pay anyone who tries to collect fees from you before they do anything to help you deal with your debt. That's illegal. Don't share your financial or personal information with someone who calls unexpectedly, offering to help you settle your debts. That's probably a scammer.

Debt relief companies, sometimes called debt settlement companies, are one option for those struggling with credit card debt, tax debt, personal loan debt and other types of unsecured debt. These companies can help you manage certain types of debt, but they won't be the right solution for everyone.

Debt relief programs and strategies aim to resolve credit issues caused by built-up debt. But, much like the debt itself, the relief option you choose will impact your future finances. You could be left with hefty fees or even more damage to your credit score.

If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief. If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.

To understand what legal credit repair is, you need to understand illegal credit repair. Illegal: Altering your social security to improve your credit rating. Report to the authorities any credit repair company that encourages you to change your social security number or acquire a new security number under your name.

Unsolicited offers: Don't respond to unsolicited cold calls, emails, junk mail, late-night commercials or infomercials, or social media posts that are either overly attractive or fear-inducing. These are all common tactics scammers use to entice you to engage.

Is debt forgiveness real? ›

Debt forgiveness is a process where a creditor pardons a debtor from part or all of their outstanding debt. Various types of debt may qualify for forgiveness. Debt forgiveness can offer relief from overwhelming financial burdens, but it does have downsides. There are alternative options for managing debt.

Updated September 5, 2019 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.

They Ask for Fees Upfront

This is the most obvious sign of a debt relief scam. If the person/company offers to help get rid of your debt but first you have to pay them a fee, they're probably lying to you. Cut off contact and file a complaint with us.

Debt relief can be a lifeline to help you get out from under unaffordable debt—but it can also damage your credit. So, if you're considering a form of debt relief, you'll want to bear in mind its effect on your credit report, where the information can stay for up to 10 years.

National Debt Relief has been in business since 2009, and has helped hundreds of thousands of people get out of debt. While National Debt Relief won't be a fit for people who owe less than $10,000, it can be a good option for those with large debts.

While debt settlement can potentially help you save a significant amount of money, the associated costs should not be overlooked. These fees will typically range from 15% to 25% of the total enrolled debt — but can also vary based on the company you choose to work with.

Payment history accounts for 35% of your FICO credit score, so enrolling in a plan with National Debt Relief could negatively impact your credit rating. The extent of that impact, however, depends on whether you're still current on your bills or not.

Debt relief can be a lifeline to help you get out from under unaffordable debt—but it can also damage your credit. So, if you're considering a form of debt relief, you'll want to bear in mind its effect on your credit report, where the information can stay for up to 10 years.