Protecting Yourself from Loan Settlement Scams

Loan settlement scams scam desperate debtors by promising them a false hope of debt reduction in exchange for upfront fees. Here’s how to spot and avoid them.

1. Know What Real Loan Settlement Looks Like
Settlement of a legitimate loan is done either by registered companies or directly with the lenders, not over unsolicited calls and emails.

Tip: Only engage with licensed agencies for settling debts. You can check them out at the Better Business Bureau (BBB) or the Consumer Financial Protection Bureau (CFPB).

2. Be alert to red flags
Scammers use high-pressure tactics and promises they cannot deliver. Be on the lookout if you experience any of the following:

Fees up Front – No respectable firm can collect any fees until the debt has been settled.
Pressure to Act Now – Scammers create a sense of pressure.
Unsolicited Offers – Unsolicited offers are probably scams.

3. No Transfer of Personal Data
They will ask for sensitive information like your Social Security number or bank account information to “evaluate” your debt situation.

Tip: Make sure you share only your personal information with verified companies.

4. Nonprofit credit counseling agencies
Nonprofit credit counseling provides a safer, lower-cost means of determining your debt relief options.

Tip: Tip: If you have a problem finding a reputable credit counselor, you might want to consider calling the National Foundation for Credit Counseling.

Conclusion
Always remember to be cautious, do lots of research, and watch out for “too good to be true” claims. Protect yourself by using only reputable organizations and asking questions before committing to any loan settlement service.