Obama Debt Settlement Scam

Posted on by Forest in Debt, General, Opinion, Saving Money & Finances

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I’m in debt and I am sure many of you are. The lure of debt settlement and especially the lure of a government approved debt settlement plan can seem very alluring but a lot of the time this kind of advertised debt settlement is a complete scam. For the next few weeks until a new law is passed (read on to hear more about this) that will pretty much cut some of these escames out expect some heavy marketing. Just keep your wits about you!

What is the Obama Debt Settlement Scam?

You may have seen legit looking advertisements plastered around websites, magazines and newspapers advertising debt settlement services that are being backed by a government bail out. This is simply not true. The government or Obama himself are certainly not bailing out the debt of millions of American’s. Sadly you not being able to afford to feed your family is not deemed likely to collapse the country so you are not worthy of such a bail out.

Basically any debt relief or settlement company offering a service based on a credit act or an Obama led program are misleading you. Not all debt settlement is a farce but it’s safe to treat them all like they are.

Debt settlement carries a heavy price and before you embark on such a course it’s important you clearly understand what is going on. Also understand that there are some laws to help you but generally you are on your own and often with debt settlement to avoid large fees, even higher interests (if you are talked into a consolidation loan) it’s often best to look at negotiating settlement with the creditors yourself.

How does debt settlement work?

I’m no expert here but I am involved in a debt management plan and have discussed debt settlement. It destroys your credit but can be a way out of debt if done properly. It’s likely that you will have better luck (and no fees) yourself or you can look at hiring a professional with a solid track record.

Debt settlement is a basic idea really. Say you owe a credit card company $5000. It is possible that you could contact them and say something along the lines of “I have $2500 from a recent bonus at work and I am looking at settling the debt that I currently hold with you”. That is not how it would be worded but that is the basics of what you are doing. Sometimes they will accept, sometimes they will come back with a counter offer, sometimes they flat out refuse. Debt settlement companies often offer guaranteed results, there is never a guarantee the creditors will accept and you could get in a confusing mess of being sued or worse.

More about the new law that will stop the Obama Debt Settlement Scam and similar scams…

September 27th (2010) will see a new law in place from the FTC that basically forces companies offering debt settlement services to fully disclose their activities. This includes all their fees, an estimate of how long the whole thing will take and the negative effects (such as destroyed credit) you will get from doing such a thing. In many cases bankruptcy or going onto a debt management plan may be more appropriate.

Hopefully these new laws will truly wipe these debt settlement scumbags off the face of the planet. Something tells me they will find another way around all this and likely will carry on operating some kind of rouse!

What I would do!

My debt is in the UK. I was in a desperate situation and was just starting to fall behind on payments, paying debt with debt. I made the decision that credit did not matter to me anymore as I was so screwed with debt. I didn’t seek debt settlement because I did not even have the cash to settle. I did however contact a genuine UK Goverment approved charity called the National Debt Helpline (NDH).

NDH helped me through the processes of setting up debt management and luckily I got all my interest frozen, all creditors agreed to enter the plan and I now am on a fixed monthly payment where 100% of my payment goes towards the debt. It pays to go through genuine government approved agencies so make sure you fully research any claims a company makes.

Debt management plans are widely available in USA too and many companies with good track records can help you through the processes of getting a reduced interest one monthly payment to your debt.

For more info on this whole scam, links to help you get in touch with legit credit counselors, debt settlement companies and debt management companies check out this article on MSN.

As always I invite your opinions and comments. They make my day .

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