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Michigan consumers should be alert for debt relief scams

Michigan consumers who find themselves in an untenable debt situation often are uncertain where to turn for help. Many will struggle for years trying to find the best debt solution, and will attempt a number of measures to ease their monthly debt service. There are a number of legitimate debt reduction approaches that can help consumers get back on track. Unfortunately, there are also a multitude of scams aimed at individuals struggling with debt. Being able to differentiate between effective debt reduction programs and fraudulent offers to reduce existing debt can be the difference between financial stability and further debt problems.

Many consumers have received phone calls from companies promising a wide range of debt reduction services. The offers may assert the ability to drastically reduce credit card interest rates, negotiate lower balances or otherwise eliminate a majority of consumer debt. The Federal Trade Commission reports that they receive as many as 200,000 complaints each month from consumers who receive these types of calls.

It is important to keep in mind that the FTC Act prohibits companies from collecting up-front fees for services to be provided later. Virtually all of the automated phone calls promising debt relief are of this variety. Many of these companies also violate the Act by making false claims concerning their refund policies and claiming the ability to quickly reduce debt by means of lowering credit card rates.

When looking for debt relief options, it is important to take a full accounting of one's current financial state, as well as an accurate prediction of the length of time required to make a significant impact. For many Michigan consumers, the fastest path to true debt reduction lies in a personal bankruptcy filing, in which a majority of consumer debt can be discharged. The individual can then begin aggressively saving for the future, ensuring that financial stability is on the horizon.

Source: Tulsa World, "Debt-reduction phone solicitations often are scams," Jason Powers, Dec. 26, 2012

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