Red Flags from Debt Relief Companies

Upfront Fees – Any company that requests to take upfront fees is not going to be one you want to work with. Unless they are a law firm, it’s actually illegal for them to do so. Due to FTC guidelines, no debt relief companies are allowed to take upfront fees anymore.

All fees should be contingent upon the company savings money for the consumer. So, the law states, if a consumer cannot successfully save money on a debt account, the consumer cannot actually get out of debt.

Although nowadays there are so many shell companies, debt relief companies really should have one central company and one central brand. Sketchy companies have been known to have multiple company fronts, some pretending to be law firms some pretending to be consumer advocates. Their intentions are usually to trick consumer out of their hard-earned money and protect themselves from any fallout. So always be mindful!

Otherwise, anyone that has a lot of complaints against them from customers is going to have some red flags.

Lofty Promises

Watch out for any companies that make lofty promises. Be hesitant to work with companies that promise you the world. No one can guarantee you a set credit score or promise that they will hit certain benchmarks and guarantees you a set amount of savings on your debt. No one can promise debt relief percentage reductions as they all vary and are based on an individual’s particular financial situation and financial hardship. No one is going to be able to guarantee promises in terms of reductions as the program’s payments are only based on estimates. Some estimates are made in good faith and are conservative, but that doesn’t mean they’re guaranteed.

Most consumers who do debt relief end up being satisfied with the services, if they go with a legitimate company. Otherwise, if the company has red flags you should be on the lookout.

Any company that operates across state lines, they will have to abide by FTC Guidelines and will be subject to the CFPB. Otherwise many customers go to the BBB and try to authenticate the company from their rating and complaints.

If there are extensive complaints against a company they will not be able to.

The Debt Relief Process Should Be Clear and Transparent

All attempts should be to explain things clearly and easily to the client. Sometimes salespeople can get caught up with oversimplifying or over explaining, so much so that it actually confuses clients more than is necessary. It’s best not to beat around the bush and try to answer directly whenever possible. Although some habits form which are hard to get rid of, salespeople need to do their best to cut back on those habits whenever possible. Analogies can sometimes help clarify but they can also over simplify the situation. If you feel like you can’t avoid doing that than this is a skill you should definitely take the time to work on.

Upfront Fees

Believe it or not, there are still companies in the debt relief industry that take upfront fees from consumers. Depending on the state, these companies do it even though regulations and guidelines prohibit them.

In this day and age where the FTC has fined many unscrupulous actors, there are still companies collecting upfront fees from unsuspecting elderly and vulnerable parts of the population. This is it’s so important for knowledge to be passed down to consumers. These companies should be held accountable for their actions.

Non-Compliant

Debt relief companies should always be compliant with regards to how they handle explaining the program and all options. If you don’t have options clearly explained and outlined there is a risk of them being out of compliance. For example, at our company when we enroll clients and they review the DocuSign, they will have to go through an additional process on our review page. Our review page singles out certain disclaimers that are important! This helps frame the information in a different way and makes sure clients understand the gist of what they’re signing. Clients needs to be aware of the risk of litigation, all associated program, costs and fees. There should also be reviews of cross-collateralization and other associated disclaimers.

Other Red Flags

Lack of empathy and a desire to quickly close the deal without leaving little time for actual review. There’s a motto in sales. Time kills deals. Now there is probably data to back this up, but the truth still remains. When you give clients time to review and mull over any questions or concerns they might have it’s to both your benefit and their benefit. Additional time they have to review the service or product will bring out more questions or concerns (if there are any). This will lead ultimately lead to a cleaner sale and allow for better understanding between both parties. However, most importantly this grants the potential client more time to understand the service they’re signing up for.

Side note: Many consumers that feel like they are being rushed may actually get turned off from the deal. Take your time and don’t let yourself get pressured into doing something you’re simply unsure of.

All in all, there are many red flags to watch out for. Our best bet is to make sure we do thorough research on the organization we are looking to work with and make sure understand the program we are enrolling in.