It’s probably a bad idea to start off with a negative but here it is, people in the debt relief industry are going to hate this article. Even friends of mine in the industry will be bummed. And why, because this article will tell you everything you need to look for when checking out a debt relief company to work with so you can protect yourself from scammers. And not everyone is a scammer but telling the difference is difficult.
I’ll agree at the start that many, read that most, companies will not be willing to provide you with the information I’m going to show you, you will need to make the best decision possible. And if they elect not to, that should tell you something in itself. Why are they not willing to share this information?
I’ll also be willing to bet the moment you start asking these important questions, many of the companies will get defensive and will not want anything to do with you. They don’t want to be held accountable by smart consumers.
I suspect that no debt relief company in the United States will be able to pass all these steps with flying colors. But that doesn’t mean you should just work with any company blindly.
By doing your homework and conducting the investigation below you will have a much better idea of which company you want to rely upon to help you. Using what you learn you will be able to make an educated and informed decision about who you think you should work with.
Many Debt Relief Companies Think You Are a Sucker and Deserve to be Scammed
Here’s a secret you, as a consumer, don’t know. Many debt relief companies pretend to represent you but really laugh at you and call you stupid. They really do.
They say you deserve to be ripped off for never doing any homework to check out the companies. Salespeople think they can lie and stretch just about any truth to close the sale. Don’t let them do that. Defend yourself and protect your family and financial future with knowledge.
People searching for debt help are in a unique class of consumers. They may not know it but they form a pool of disadvantaged people that are prime for the picking by scammers and people that want to manipulate them for profit.
People in debt are scarily easy to manipulate because they are hoping for a miracle and allow themselves to be blinded to commonsense while searching for what they want to hear, not what they really need. Denial is a bitch y’all.
So here is my super-secret, lip-smacking guide to checking out any company that wants to charge you to deal with your debt and jump in between you and your creditors.
This group of companies includes:
- Nonprofit Credit Counseling Agencies
- Debt Settlement Companies
- Debt Elimination Hucksters
- Debt Validation Schemes
- Anyone That Wants to Charge You to Make Your Debt Go Away
- Not So Much Bankruptcy Attorneys, But What the Hell. Check Them Out Anyway.
- Any Rage Against the Establishment Plan Like Tax Avoidance, Straw Man, or Other Assorted Crazy Fringe Ideas
- Tax Relief Companies
- Mortgage Elimination of Loan Modification Companies
- Foreclosure Rescue Companies
Feel free to print out this article and use it as a guide to collect the information you need. I’ve made it as step-by-step as I could to make it easy to protect yourself.
Write the answers down and save this information in case the relationship goes sour in the future. You’ll be glad you did.
The Beginning – Basic Information
Let’s start by asking the debt relief company some very simple and basic questions to identify them.
What is your physical street address?
What we are looking to find out is if the company is using a mail drop or postal center to hide behind.
While it is true that some startup companies do legitimately use these mailbox centers to receive mail, it is also true that many fly-by-night outfits use them as well to shield themselves so you can’t find out who they really are. They will close the mailbox and move on to the next thing.
It is also true that one company I wrote about had virtual mailboxes around town with different company names on them to run multiple scams at the same time.
One insider said, “They have multiple virtual offices, but all their businesses run and operate at [ ]. Two people’s entire job consists of driving around and picking up all the mail that gets sent to the virtual offices. They need all of these offices to separate the companies, when in fact they are all the same entity, the same customer service representatives, and the same two crooks running the show.”
If a company is not substantial enough or can’t provide you with a physical street address then you may want to consider if they are going to be around if a problem occurs.
If they do give you a physical street address with a suite number, do an internet search engine search for that address and suite number. Many of those turn out to be virtual office spaces. They look like legitimate addresses but five seconds of checking will show you they are just a fancier version of the maildrop mask.
You might want to suggest you are going to be in the area and you’d like to drop in unannounced at their address. If they try to talk you out of that, that might make you wonder why.
Who are the owners of the company?
You don’t want the name of the office manager or supervisor, you want the name of the owners or managing members of the limited liability company. Once you have that information in hand, do a web search for any information about them. It’s much easier to catch serial scammers this way.
Is your company registered to do business in my state? What’s the registration number and can you forward me a copy of the state registration for me to see?
If the company is not willing to provide you with their state registration or debt relief license information or tells you it is not necessary. Don’t take them at their word, check it out.
To find out if a company is registered to do business in your state just turn to the web. You can generally do internet search engine search for [Your State] Corporation Search, like California Corporation Search and find the state agency that is responsible for company registrations.
If you have any questions about if the company does not need to be registered just call the state department that allows you to search for companies in your state and ask them.
Is your company licensed to offer debt relief services in my state? What’s the license number and can you forward me a copy of the state registration for me to see?
You can also do a similar search for licensing details. Do an internet search engine search for [Your State] Professional Licensing, like California Professional Licensing and find the state agency that is responsible for licensing businesses.
Give them a call and ask if the company that is pitching you their services needs to be licensed in your state to sell you debt help. If yes, ask the kind state employee on the phone if the company you are thinking of using is licensed in your state.
Some More Easy Online Research
Look the company up on the BBB website.
See what the BBB says about the company and pay attention to make sure the address the BBB lists, matches the address the company gave you. If not, the BBB report may be for a different branch or affiliate and that rating may not apply to the office you are talking to.
Some debt relief companies will blast you with all sorts of reasons the BBB should not be trusted or isn’t reliable. The BBB is not perfect. They’ve had some issues and even I have been critical of them at times. But they do remain a good repository around of information about companies.
For me, the most critical parts of the BBB report to look at are their time in business, recent complaints, and if the company has any unanswered complaints.
Search for any information about the company on GetOutOfDebt.org.
Use the search box on the GetOutOfDebt.org website, probably near the top, to search for information others may have posted about the company. I might have written about them in the past.
Contact your state attorney general office and ask about any complaints.
You can find a comprehensive list of Attorneys General, click here.
And that’s the easy stuff!
Moving On – More Research for Professional Consumers
So once you feel confident the company is legitimately organized to operate in your state and can verify the backgrounds on the owners and know where they are physically located, the next part will be eyeopening.
Before you embark on your journey with the debt relief company we need some basic information about how effective their services are. It’s one thing to say “You can trust us, we are just innocent charitable non-profit credit counselors,” but what is the truth about performance?
Many hospitals are non-profit and charitable. Do you want to go to the hospital where 90 percent of the patients are never cured or die or do you want to go to the hospital where 90 percent live or are cured? The choice is 100 percent yours to make.
Require the Company to Show and Prove How Effective Their Services Are
If a company is not willing to prove how effective their services are, that’s a deal killer for me. Walk away. And don’t believe some credit counseling salesperson of debt settlement closer that companies won’t provide performance information.
So let’s get some facts from the debt relief company.
What kind of result or outcome should I expect to receive if I go with your company?
It is important to have a clear and thorough understanding of what services you are being sold. And you are being sold, make no mistake about that.
Keeping a record of the benefits the salesperson promises and what the client agreement actually says you are contracting for, is important. You want to catch any promises that are not made in the contract.
What percentage of all people that enrolled with your company, even those that dropped out, achieved the results you claim? Please provide me with the formula for how you calculated your performance claims.
Here is where you are asking the company to put in writing and disclose how they arrived at their numbers for their performance or success claims.
As one company said to a consumer, “Our numbers don’t include people who didn’t finish the program.” That’s an important fact to know. So if 95 percent of people never achieved the results the program offered, how can a company stand behind a statement that 100 percent of clients are successful? That’s why knowing how they calculated their performance numbers is important.
You also need to know what time period these numbers cover. Is this just for the last week, the last month, or the last decade?
Will you provide me with a written statement about your performance results?
If they say no, that’s a warning flag. Mumbling something over the phone isn’t good enough. You want it in writing.
How much are the fees for the service you are selling me?
That’s an important fact to know.
Do I have to pay anyone else for any service as part of your program? If so, who and how much?
Keep in mind, most mortgage relief and debt relief providers may not charge an advance fee. There are some exceptions though.
Do you offer a money-back guarantee? If yes, I’d like to see it in writing on your letterhead.
Make sure you closely read the “guarantee” to see if there are any loopholes they can wiggle out of and not pay you back if things go badly.
The Home Stretch – Almost There
Once you made it this far and still want to work with the debt relief company in question, you only have one major hurdle to cross.
Now is the time the debt relief company will try to close the deal and complete the sale. Many debt relief salespeople are paid a bonus, achieve status, or primarily earn money by how many sales they can make so they may be pushing you to sign the contract all through this process. But hold your ground and get the facts first. Don’t let them push you into signing some online contract or agreement unless you are sure that’s what you want to do.
Ask for the agreement in writing, either sent to your email in a PDF format or sent through the mail. You need time to read the agreement and not be rushed.
Here are the key areas to look for in the written agreement.
Do the services described in the agreement match the services you were told you would receive when you contacted them?
Pay careful attention to this. Salespeople often make big claims about what you will be getting but most contracts I review contain a very different listing of services. For example, a debt settlement company with a lawyer might say they will represent you if you get sued by one of your creditors, but the contracts normally say they will not appear in court for you or with you. There may be additional charges as well.
Whatever the contract says you are being asked to sign is what counts, nothing else.
Does the agreement have an arbitration clause in it? If so, be aware you may probably be giving up your right to go to court if a problem arises.
It might have an arbitration clause and you understand this might prevent you from suing in case of a dispute. Arbitration typically benefits the company more than the consumer. It’s just something to be aware of.
Is there a money-back guarantee in the contract if the company is not able to deliver the services promised?
If they provided you with a money-back guarantee as part of your initial checking, make sure it is included in the contract. Also, make sure it is a reasonable money-back guarantee. I’ve seen some that say you are not eligible for any money back unless you make all the payments for services. But why would you want to continue to pay for services that are defective or not working for you?
Is the contract with the company you checked out and thought you were dealing with.
Make sure the company named in the contract is the same one you did all your research on. Sometimes the front end companies are just marketers and do not deliver the actual service. They might even assign your contract to another entity so check the fine print.
Does the contract require you to pay for any services or items you were unaware of?
Read the fine print carefully and make sure you are obligating yourself to any expenses that were not previously disclosed. I’ve seen agreements that tack on extra charges for discounted travel or educational expenses that are completely useless.
One Last Point – And This is Important
Did the company insist or encourage you to contact other solutions providers before you make a final decision?
If the company did, they should get bonus points for this.
It’s important that you not rush to make a decision about what path to follow to solve your problem before you investigate other possible solutions. The more education you have about possible solutions, the more confident you will feel you made the right decision.
If you are not sure what I’m talking about, use our free online get out of debt calculator to view the different major options.
Your Decision – Should You Choose to Accept It
As I stated at the beginning, I doubt any single company is going to satisfy every question but at the very least you will be better informed about who you want to work with. In fact, you’ll be better informed that is than 99 percent of other consumers shopping for debt relief help.
So it’s time to make your decision about what company you want to bet your financial life on. Having the information and doing the research I suggested should give you a pretty good idea of who stands out to you.
Let me know what your results are when you use this guide and if you think I missed any important questions.
Originally published August 14, 2012.