One side effect of a market with so many folks having difficulty making their mortagage payments has been a plethora of predators who suddenly appear on the scene with promises of taking away your debt, helping you avoid foreclosure, negotiating with your bank on your behalf, quick fixes on your credit report, etc. Some of these companies even go so far as to lable themselves as "nonprofit."
The Federal Trade Commission says to watch out for the following scams - debt negotiation companies that:
- charge a high up front fee to negotiate with lenders, qualify you for a government program or some type of debt elimination scheme
- require you to make monthly payments to them - not your creditor
- tell you to stop making payments or not to communicate with your creditors
- require substantial monthly service fees
- guarantee they can remove your unsecured debt (credit cards are an example of unsecured debt)
- promise that unsecured debt can be paid off with pennies on the dollar (e.g. workouts that shave a huge % off your balance)
- claim that if you use their system you will avoid bankruptcy
- demand payment as a percentage of your savings
- claim that creditors never sue consumers for non payment of debt
- promise that using their system will have no negative impact on your credit report
- claim thtat they can remove accurate negative information from your credit report
Never agree to transfer your home's title to someone with the promise that they will prevent foreclosure and sell or rent your home back to you.
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