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Columns | Go Far With Kovar

Is Debt Relief a Scam?

by Taylor Kovar
Hi Taylor - Debt relief isn't real, right? There's a catch or something? I have a few grand in credit card debt that I'd like gone, and I get all sorts of calls and mailings about debt relief that I assume are all scams. Am I wrong about that? - Destiny

Hi Destiny - You are, in fact, a tiny bit wrong - but only a tiny bit, so there's no need to beat yourself up. In many cases, your name is on a giant mailing list and the services won't actually help. Whether or not a debt reliever can improve your situation depends on what that situation is. And, of course, some of those calls are bogus, so you have to be careful.

Because debt is a massive issue here in the US, it has naturally become a lucrative industry. Lenders have made tons of money awarding people debt, and now other companies are managing to make some revenue helping people settle outstanding balances. If debt relief was nothing more than a scam, it would have fizzled out long ago. As you can see from the continued mailings, the trend isn't going away.

Relief companies offer a few different types of services, so this is one of the things you have to research if you plan to take someone up on a debt elimination offer. In addition to debt resettlement, you may have access to debt management, consolidation and repayment planning. These services should come with different fees and timetables; you'll want to be clear about your needs before reaching out to a service provider.

When searching for a legitimate debt reliever, the biggest red flag is a company that charges up front. You shouldn't pay a dime for debt relief until you've seen some of the benefits. You will sign contracts and there will be mechanisms in place to ensure you pay later, but paying up front is a big no-no. There's a lot of uncertainty when it comes to debt resettlement, and you shouldn't pay until you know what you can get.

Fortunately, lots of these debt relief companies have been around for a long time, and the good ones are generally scored by the BBB. If you get a phone call or an offer in the mail that seems too good to be true, look the company up. If there's a BBB rating and a fair number of positive reviews, the company is probably trustworthy and worth looking into.

Debt relief isn't for everyone, but getting out of debt should always be your objective. If you do some research and it looks like one of these companies can help you and the money saved will offset the fees, it seems like that's a good option. Hope this helps, Destiny!
Taylor Kovar September 14, 2018
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Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. To submit a question to be answered in this column, please send it via email to Question@TaylorKovar.com, or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin, TX 75901.

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