FTC: Credit Card Debt Settlement Tips, Red Flags

DebtThe Federal Trade Commission today is urging caution for those with mounting credit card debt who seek companies that promise “pennies on the dollar” solutions.
There is no guarantee that a debt settlement company can convince a credit card issuer to accept only a partial payment for the full, legitimate debt, the FTC said.
In the case where they do persuade such an arrangement, the consumer must pay a certain amount every month and “may have to pay hefty fees up front to the debt settlement company — putting them further in the hole before they get any relief.”
The FTC is providing a new online consumer guide, Settling Your Credit Card Debts.
The resource provides lists of red flags to watch, including companies that promise to settle credit card debt. It also reviews practical “no-cost and low-cost” options for help. That includes dealing with creditors directly and contacting a credit counselor.
The FTC urges consumers to be persistent in trying to reach an agreement directly with the credit card company. And it advises good record keeping for better detailing a financial hardship, with the goal of a plan that reduces monthly payments to a manageable level.
“Rather than pay a company to talk to your creditor on your behalf, remember that you can do it yourself for free. You can find the telephone number on your card or your statement,” the FTC reminds consumers.
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Hefty ‘Debt Relief’ Fees Await Credit Card Over-Users

One thought on “FTC: Credit Card Debt Settlement Tips, Red Flags

  • June 24, 2010 at 7:47 pm
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    Two of the most important tips when considering a prospective debt settlement company are 1) asking for business references and 2) seeking a contract structure in which the company’s fees are tied to the success of your settlement.

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