Why You Should Beware “Get Out of Debt Quick” Schemes

Many Americans have struggled with debt for several months, if not years. It’s only natural to wish there was a relatively quick and easy solution for dealing with it. In fact, when someone comes along touting a way to get out of debt ASAP, it’s only natural to want to hear more — and to want to believe the answer really could be that simple.

Here’s why you should always beware of these “get out of debt quick” schemes.

Debt Relief Scams Prey on Vulnerable Americans

An entire industry has arisen to help borrowers address debt through strategies like debt consolidation and relief. While there are some companies operating transparently and fairly above the table, there are also scammers looking to take advantage of Americans in a financially vulnerable position.

How can you tell the difference between a legitimate company and a scam? Look out for these red flags, which may indicate a con is afoot:

  • Only scam companies will guarantee certain results within a certain timeframe.

  • Scam companies often ask for partial or full payment up front, even before they’ve delivered results. This violates consumer protections as outlined by the Fair Trade Commission and is therefore illegal.
  • Illegitimate companies will make it difficult, or impossible, to track your progress. 
  • Scammers will gloss over the risks and talk up the advantages.
  • An illegitimate company may ask you to provide personal/financial information before they’ll provide information to you about its services.

Reputable companies will demonstrate potential positive outcomes while also providing transparency about potential consequences. Since negotiating with creditors is not an exact science, no company can truthfully promise a certain outcome. Debt relief firms on the up and up will only collect payment until after they have performed the agreed-upon service, like settling a debt. Legitimate companies will also provide complete visibility with tools like a customer dashboard you can access for up-to-date information on where your accounts stand.

How Long Does It Take to Get Out of Debt?

Anyone assuring you it’s possible to get out of debt immediately and effortlessly is misrepresenting the truth.

Debt settlement can take anywhere from two to four years or longer, according to Freedom Debt Relief — it depends on how long it takes enrollees to save up enough money to negotiate, and then again on the nature of those negotiations. People entering a program with many delinquent accounts or many thousands of dollars can expect it to take longer than someone with less debt.

Another strategy, debt management, will generally take three to five years to complete. This strategy entails making a single payment to a credit counseling agency, which then distributes funds to creditors accordingly. Enrollees must commit to keeping up with these monthly payments for the full duration of the program, as well as foregoing using new credit during that time.

Taking out a debt consolidation loan to cover higher-interest debts means agreeing to repay that debt in fixed installments for the entire loan term — which can span years, depending on the amount borrowed.

Even people who decide to try the snowball or avalanche methods at home to strategically repay their debts will notice it generally takes months, if not years, to systematically address every account.

How long it takes you to get out of debt depends on how much debt you have, how much money you make and which strategy you employ. But there’s no denying escaping debt tends to be challenging and take years — so be prepared to find a legitimate strategy and work hard toward sticking to it. 

And, be very wary of anyone promising to make your debt go away like magic.

Written by Jordan

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