Scam artists prey on the vulnerable to profit especially in times of crisis.
If you are struggling to keep up with your bills, debts and/or have underwater assets, then filing for personal bankruptcy with the help of an experienced attorney may be the best solution.
The three following offers of ‘debt relief’ and assistance to ‘rescue’ ‘help’ or ‘save’ you are not in your best interests.
Scam #1 Debt Settlement Companies
Debt Settlement companies advertise heavily on providing you with “debt relief” to avoid bankruptcy. They’re the companies advertising all over the internet, on television, radio, through the mail, and with cold calls.
The problem is that they offer no value to the consumer. They promise to negotiate effectively with your credit card companies to settle your debt for a reduced amount.
TIP: Many debt relief settlement services are owned by the credit card company itself, or they’re controlled by big bank lobbies and committees.
They’ll say they can setlle your debt for pennies on the dollar because they have decades of experience in working with these credit companies and have built a trusted relationship.
No doubts on the relationship angle —several debt relief providers are actually owned by credit card corporations.
Results are typically nominal and not worth the costs.
In fact, some of these shady companies slip in clauses to the Service Agreement stating they cannot help a debtor whose credit score drops below a certain number, then they intentionally hold onto your lump sum as negotiated with the creditor until your score is above that threshold!
Scam #2 Home Mortgage “Rescues”
A bankruptcy foreclosure scam also called a mortgage rescue scam is operated by individuals or companies targeting properties that are pending foreclosure or mortgages that are at risk of being foreclosed.
These predators usually advertise over the internet and in flyers distributed locally, often in high-traffic areas of neighborhoods with past due mortgages.
The scammer will approach a troubled homeowner offering to rescue their homes from certain foreclosure by either negotiating with the bank on their behalf, OR by securing affordable refinancing for the owner.
These scam artists may:
- Call themselves “mortgage consultants,” “mortgage rescue service,” “foreclosure service” or similar names…
- Collect a fee upfront …
- Tell you to start making mortgage payments directly to them …
- Tell you to transfer title or deed over the property to them.
These “rescuers” and phony mortgage consultants will pocket your payments instead of paying the mortgager –then they’ll file a bankruptcy on your behalf. This will only temporarily stop foreclosure on your home.
Ultimately, they scam people out of thousands of dollars, foreclosure happens anyway and essentially they force people into bankruptcy.
Scam #3 The Bailout
In a bailout scam, the company tricks the homeowner into signing over the title by telling them they can remain in the home as a renter and enter into a buy-back program that will eventually deed the property back to them.
But the terms are so steep and much worse than their original terms that they fail to keep up soon after the agreement is signed.
The scammer walks away with the equity while the homeowner loses possession and in some instances the homeowner will still be stuck with the responsibility of paying the mortgage.
Massachusetts has tried to protect residents with a law that prohibits transfer of home titles to consulting companies that operate for profit.
There are a few nonprofit organizations in the commonwealth that are offering consulting services to troubled homeowners, however, people should be aware that these organizations are still susceptible to operating pressures that can influence results –or lack thereof.
If you have financial struggles and mortgage arrears, filing for personal bankruptcy to save your home might be a real solution when done properly with a trusted and experienced attorney.