Ask Amy: Fixing your finances for the new year? How to tell if a debt relief company is legit

(Jenny Kane, Copyright 2019 The Associated Press. All rights reserved.)

The new year is a time when a lot of people decide to get their finances in order. You may want to be careful if you are looking for a company to help. Today we are answering a question about debt relief and credit repair fraud.

You may be getting offers from companies offering to help get rid of your debt. Not all companies are the same, so do your homework before handing over all of your information.

Q: “Is (the company) Citizen’s Debt Relief a scam? Is it ok to work with them to consolidate your credit card debt giving your social security number and credit card numbers?” --Nick

(Copyright 2021 by KPRC Click2Houston - All rights reserved.)

A: We did some checking and Citizen’s Debt Relief is a legit company. The Better Business Bureau gives it a 4.67 stars out of five. There are minor complaints, but nothing about fraud. And yes, you will need to give your personal information to a company working on your finances.

The Texas Attorney General’s office says a debt relief company may be fake if:

  • They contact you first
  • They ask for fees up front
  • Offer recurring monthly fees for the service
  • Pressure you to sign a contract on the spot
  • Offer you a special deal on federal loans. Companies can’t do this, federal loan repayment levels are set by law.
  • Pressures you to sign a “third party authorization” or “power of attorney”
  • Requests your Federal Student Aid PIN
  • Uses a name or logo that makes it seem as though the company is a government agency or is associated with a government agency

The Federal Trade Commission also tracks debt relief and credit repair scams. Here’s what they say about the work they are doing tracking down these fraudulent companies.

“The FTC has brought scores of law enforcement actions against these bogus credit-related services, and the agency has partnered with the states to bring hundreds of additional lawsuits. Further, in 2010, the FTC amended its Telemarketing Sales Rule to protect consumers seeking debt relief services, like debt settlement or credit counseling. The Rule prohibits for-profit companies that sell these services over the telephone from charging a fee before they actually settle or reduce a consumer’s debt. It also prohibits debt relief providers from making misrepresentations and requires that they disclose key information that consumers need in evaluating these services.”

Need help getting out of debt? The FTC has free resources to help people trying to sort out their finances.

(Copyright 2021 by KPRC Click2Houston - All rights reserved.)

Just request it and they will send you information about getting out of debt or making a budget.

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About the Authors:

Award-winning TV producer and content creator. My goal as a journalist is to help people. Faith and family motivate me. Running keeps me sane.

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.