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Avoid 'get debt-free' scams by following simple tips

The recession that has plagued the country in recent years has taken a big toll on Americans' financial health, according to experts. As a result, many are saddled with untenable credit card and loan debt, and they are seeking debt relief that can help them expunge their crushing financial responsibilities. Thousands have turned to unscrupulous debt management companies that fleece consumers of their valuable money while failing to resolve debt problems. This has left a large group of Americans in even worse debt with fewer options.

Only about 10 percent of Americans involved in the debt-relief plans are actually helped by the agencies. Instead, the vast majority are stuck with high administrative costs and additional bank fees that can cost even more than their initial debt amount. By the time they realize they have paid thousands to the debt relief firm to no avail, these consumers' credit is ruined, according to experts. Avoid being a statistic by following a few simple rules for debt-relief success.

First, avoid companies that are seeking attorneys' fees before you start the debt-relief process. Instead of paying those fees, consider putting the money toward a settlement with your credit card company. Your bank or lending agency is more likely to negotiate with you if you have a modest savings that you can put toward your debt. Dealing with your credit card agency directly can often help you avoid financial ruin from scams.

Next, do some research about the debt-relief company you are considering. You could look at Internet sites for consumer reviews or look at information from the Better Business Bureau. Additional information can also be obtained from the State Attorney General's Office, according to financial experts; those officials monitor financial institutions for scams.

Financial leaders also recommend working with a local attorney instead of someone who can only interact with you over the phone or Internet. A nonprofit credit-counseling agency can also be a good choice, because those government-approved groups are closely monitored.

Protect your credit score and your pocketbook by carefully considering your debt relief options.

Source: NWI Times, "Drowning in debt? Don't fall prey to a 'get debt-free' scheme," Madhusmita Bora, Dec. 22, 2012.

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