Debt has become the cornerstone of the modern economy, but it also makes the common people susceptible to scammers.
The modern lifestyle often begets people to take debt, whether it’s mortgage or credit card expenses. An average British household has debt worth £65,515, including mortgages.
This makes the common people an easy target for fraudsters, who always seek ways to rob people of their hard-earned money. The Financial Conduct Authority (FCA) has notified us that many unauthorized claims management services target people in the UK and offer them debt relief.
These fraudsters levy huge fees and promise to get creditors compensation from their lenders and then disappear on them.
But what are debt scams really? Is there a way you can avoid them? In this article, we answer these questions and discuss strategies to spot and avoid debt relief scams.
Debt relief scams can come in various forms, and mostly, the fraudsters try to mimic the actual negotiators. These threat actors generally ask for your personal information and upfront payments.
These scams can have different touchpoints. They often entice debt-ridden and vulnerable people with the help of these legitimate-looking websites, persuasive human agents, or robocalls. Here are some of the debt scams that you should know of.
Be careful of those companies that ask for payment first before the work is done. Genuine businesses mainly operate through a commission-based model and charge a fee only after there is a successful settlement. If you find the company asking for money in advance, it could be a sign that the company is a fraud.
Prioritize your financial security and conduct thorough research before you engage with a legal firm. Check their reviews, testimonials, and information regarding their reputation and experience. Exercise due diligence and be cautious, and you will be able to protect yourself from falling into their traps and schemes.
Be wary of companies and firms that make unrealistic promises about debt reduction. Claims of eliminating debt entirely or reducing it by a specific amount are often too good to be true. Legitimate debt relief services will be transparent about their capabilities and avoid making unrealistic guarantees.
Remember, the extent to which a creditor or bank is willing to negotiate depends on various factors. A reputable debt relief company will assess your individual situation and provide realistic expectations regarding potential debt reduction.
Protect yourself from scams by conducting thorough research and verifying the legitimacy of any debt relief company you’re considering. Look for reviews, testimonials, and information about their experience in the industry.
By exercising caution and due diligence, you can find a reputable firm that can provide effective guidance and assistance with your debt management needs.
Reputable debt relief companies will not cold call you or approach you out of the blue. If you receive such a call or message, it’s likely a scam. To protect yourself from these types of offers, contact a reputable debt relief company on your own terms.
Research firms in your area read reviews and verify their credentials before engaging in their services. By taking a proactive approach, you can ensure you’re working with a legitimate and trustworthy company.
Many of these fake companies will try to convince you of their legitimacy by mentioning government affiliations. Moreover, they can even mention certain government “loopholes” to help you get rid of credit. In such situations, always be careful and do your research before agreeing to any binding terms.
Usually, a genuine platform will first verify and look through your documents before taking you on as a client. However, a fake company will take you on as a client even before taking a look at the paperwork. This is considered a red flag and can be a sign that the company you are engaging with is fake.
You may even be asked to cut off communication with the lender. For example, if you have taken a payday loan from Salad Money and have defaulted on the repayment, some scammers may ask you to stop receiving calls or responding to emails from them. Instead, they would ask you to pay a certain amount to them so that they could broker a deal on your behalf.
If you are in a difficult debt situation, it is important to know the red flags that indicate a debt relief scam. This can help you avoid getting scammed. Here are some of the things which you can try.
The best way to resolve a financial crisis is to speak directly with the lender, whether it is a bank or a FinTech platform. By explaining your situation, you can often avail of waivers or get some more time to pay back the loan. Honest and open communication can enable you and the lender to reach a mutually agreeable resolution.
Always read every email twice and check the email address before clicking on a link. Scammers will often use email IDs that almost resemble a genuine company. If you start to receive robocalls after having clicked on a link, disconnect immediately and block the number.
Always remember to ask questions until you have all of your questions answered. Raise questions about the fees and the process for debt relief. To ensure the company’s legitimacy, check on the Financial Services Register. If the company is unregistered, immediately consult with authorities.
If you are being constantly bombarded with messages, emails, or calls from these debt relief agencies, immediately notify the FCA. Genuine companies will never harass you or call you once you expressly ask them not to. It is always best to inform authorities if you feel something is wrong.
Proper financial planning can help you avoid debt. Even if you do take out loans, ensure that you are prioritizing debt repayment over all other non-essential expenses. By paying the minimum amount every month, you can keep the interest in check and also prevent being penalized.
Paying your debt back on time can help you improve your credit score, leading to lower interest rates and better lending terms in the future. With the help of these few tips, you can stay clear of debt relief scams as well.
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A self-proclaimed Swiftian, Instagram-holic, and blogger, Subhasree eats, breathes, and sleeps pop culture. When she is not imagining dates with Iron Man on Stark Tower (yes, she has the biggest crush on RDJ, which she won’t admit), she can be seen tweeting about the latest trends. Always the first one to break viral news, Subhasree is addicted to social media, and leaves out no opportunity of blogging about the same. She is our go-to source for the latest algorithm updates and our resident editor.
