Non-profit Debt Relief Companies – A disappointment
Over the past few years, many companies posing as non-profit debt negotiation and debt relief organizations have been declared fraudulent by the Federal Trade Commission (FTC) and charged with penalties. These companies offer tempting promises and cheat consumers leaving them disheartened and disappointed.
“Non-profit” Debt Relief Companies and their claims:
Such organizations cause the consumers to believe that they want to help the consumer get out of their distressful situations.
Debt reduction – These organizations promise to substantially reduce any type of debt (by almost 10 to 50%)
Better than being Bankrupt – They use tactics which influence the consumer psychologically making them feel that working with the organization is a better choice then going bankrupt.
No effect on Credit Ratings – The consumers work with the non-profit debt relief company to improve their credit ratings but will definitely not notice any improvement even in the long run.
What these companies ask you to do?
A specific amount at periodic intervals is charged by these companies as fee for their services. This fee is taken with the promise that you won’t have to worry about your bills or creditors anymore.
Non-profit Debt Relief Companies – the facts
Always take a while to stop and think about the tall claims made by these companies. If these sound too bogus then you may be cheated sometime in the long run. Such companies earn money from their clients but on paper they claim to be a nonprofit organization. They can simply show false break-even margins in their balance sheets by exaggerating their operating expenses.
An Example of a fraudulent Non-profit Debt Relief Company
In early 2005, the National Consumer Council, a front group of debt relief and negotiation companies, was charged by the FTC for cheating 45000 customers who believed the company’s promises of complete freedom from debts. Other companies such as London Financial Group and Financial Rescue Services were conveniently operating under the NCC. These companies too promised complete freedom from debts. The clients were asked to deposit money in the company’s account in return for their services. Doing this actually worsened the debt crisis of these clients.
Do Legitimate Non-profit Debt Relief Companies really exist?
Yes, these do exist, even though they are very few in number. Inquiring with the Better Business Bureau and other similar institutions can help you determine whether a debt relief company is legitimate or not. Their records enlist the various debt relief companies which have fraud cases against them. This can help you identify if the company you are planning to transact with appears in this list.
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