How to Recover from a Debt Settlement Scam

Many people have credit card debts that become unmanageable, and their search for a way out of the burden of the debt itself often leads them into believing the promises given by debt settlement or credit counseling companies. In many cases this ends positively for the debtor, with the debt being satisfied and the debtor getting debt relief. However, if a person is in over his head with credit card debt and looking for a way out, his desperation may lead him into the trap of dishonest debt settlement companies.

How the Debt Settlement Scam Works

Debt settlement companies are generally designed to be a "middle man"between the debtor and the credit card company they owe. Their main purpose is to negotiate for debtors for a lower payment rate and/or a lower total of debt. Since credit card companies charge the rates they do, it's easy to see how this avenue can be alluring. With most debt settlement companies requiring a certain amount of debt to even participate in a debtor's case, they ensure themselves a substantial profit from performing very little actual work.

So how do debt settlement companies take advantage of people with substantial debt:

• They lure the indebted individual to their services by promising a payment schedule the customer can handle while dealing with the credit card company to lower payments.
  
• They convince desperate customers to sign payment contracts that allow the debt settlement company direct access to the customer bank account and tell them that any money withdrawn is in an effort to lower payments and to convince the credit card company to accept a lower total balance.
  
• However in reality they aren't in any form of negotiations with the credit card company, and often times they aren't even making the customer's monthly payments ordered before the "negotiations" took place.
  
• This leaves the customer with most or even all of their original debt, while also being left without the funds acquired by the debt settlement company.

What To Do if You are Scammed

Typically there isn't much assistance when it comes to the recovery of funds taken by a debt settlement company, due to the fact that they got the customer to sign a payment contract for a service that was never guaranteed. This can become an extremely frustrating situation for a person in debt. In most cases the best option for a customer that has been taken advantage of by a phony debt settlement company is to hire an attorney that specializes in funds recovery in fraud cases. They will generally be able to find the fraud in the contract and pursue the lost amount of funds by filing a lawsuit.

Unfortunately, this isn't an option for everyone. Some people don't see the scam for so long they end up without the funds to hire a lawyer, and they wind up without anything, still being burdened by the credit card company they originally owed. In these instances, the best thing a person can do is immediately close all accounts the settlement company has access to and let the debt settlement company know you are contacting the Better Business Bureau and filing an official report, and demand repayment of all funds paid for services. There have been many people who were swindled by these scams and recovered much, though not all, of their lost funds by being resilient and persistent when dealing with these companies.

Getting Help

To avoid getting taken advantage of, consider using a debt settlement attorney instead of a debt settlement company. Attorneys all have to pass the Bar exam and are held to a code of ethics called the Model Code of Professional Responsibility. This means an attorney cannot make false promises, cannot charge you unreasonable fees and must be your advocate as you work out your debt problems.