If you’ve searched online for help with debt, you’ve seen the ads — promises of erasing 80% of your debt, government “stimulus” programs that don’t exist, “guaranteed” outcomes. Most of these companies aren’t criminals, but plenty of them will charge upfront fees, deliver little, and leave you in worse shape.
The single most important rule
Under the FTC’s Telemarketing Sales Rule, no debt-relief company that contacts you by phone (or that you contact and enroll with) may collect fees before at least one debt is settled, you make at least one payment toward that settlement, and you’ve been informed of the terms. If a company asks for an upfront fee, walk away.
Other red flags
- “Guaranteed” settlement results. No one can guarantee what creditors will accept. Anyone who does is lying.
- Pressure to enroll the same day. Legitimate firms expect you to take a few days to think about it.
- “Government program” language. There is no federal program that erases credit card debt for ordinary consumers. Some companies imply otherwise to seem more authoritative.
- They tell you to stop talking to your creditors entirely. You should always have the right to communicate with your own creditors.
- They won’t put fees in writing. Real programs disclose total fees, fee structure, and timeline in writing before you sign.
- No accreditations. Look for AFCC or IAPDA membership and a Better Business Bureau rating you can actually verify.
Questions to ask any debt-relief company
- Are you a member of the AFCC (American Fair Credit Council) and IAPDA-certified?
- What is your total fee, and how is it calculated?
- Who holds my deposited funds — and can I withdraw them at any time?
- How long has your firm been operating? Who owns it?
- Will I review and approve every settlement before it’s finalized?
- What happens if a creditor refuses to negotiate or sues me during the program?
- Can I see a sample settlement letter from a recent client (names redacted)?
Where to verify a company
- FTC.gov — for active enforcement actions
- Your state Attorney General — most states regulate debt-relief firms
- BBB.org — for complaint history and resolution rates
- AFCC and IAPDA — for membership and certifications
A legitimate debt-relief company will encourage you to do all of the above. If a salesperson gets defensive when you ask any of these questions, that’s your answer.