Even when struggling with overwhelming debt, some people in Ohio may be hesitant to file for Chapter 7 bankruptcy until they have exhausted all other options. In doing some research, they may have come across many websites that seem to have viable solutions. However, these could be scams.
Here are some signs that a debt relief company may be a fraud.
1. They want customers to pay upfront
According to the Federal Trade Commission, it is against the law in the U.S. for companies to charge upfront fees for debt relief services. The FTC has investigated numerous scams involving fake debt relief companies that took people's money with no intention of helping with their financial burdens. In some cases, people do get some of their money back, but in most cases, by the time the scam is uncovered, their creditors have already taken action against them for nonpayment, and the fees they paid go unrefunded.
2. They guarantee success
The Better Business Bureau explains that dealing with debt typically means taking actions such as contacting creditors and arranging alternate payment plans. The outcome depends on the creditor, not the debt relief company, so there is no way to guarantee that a given plan will succeed. Some companies go so far as to post a guarantee right on their webpage. This is a major scam red flag.
3. They encourage illegal tactics
One common scam debt relief companies recommend is a new credit identity. Basically, they are telling their customers to create a fake identity by applying for an Employer Identification Number and forgoing the use of their Social Security numbers. This is illegal and can get the customer in serious legal hot water on top of the financial trouble they are already in.