The tough economic situation has hit many families hard, and most people are looking for ways to get out of debt. A number internet companies lately have started advertising government debt relief grants, but consumers should beware. Such ads are probably making false claims. While there is some funding available for individuals through government agencies, you’re not likely to find it through these websites.
- The promise of government grant money to settle consumer debts (such as credit cards) is just another tactic used by debt settlement companies to dupe unwitting consumers into paying for services they may not even need.
- Ads promising credit repair are also frequently selling debt settlement services, and much of what they do you could do for yourself, for free.
- The FTC has warned consumers that debt settlement companies may be misrepresenting their services. A recent consumer alert notified the public about debt relief ads that might actually be selling bankruptcy services. It has also sued debt reduction companies for falsely promising to lower customers’ interest rates.
- In many cases, credit counselors claim to be non-profit when they are actually a for-profit company. Be sure to ask for credentials, and verify them with your local consumer protection agency.
- Beware of promises to settle your debts for less than you owe, especially when the debt settlement agency requires hefty upfront payments and demands that you stop making regular monthly payments on all or most of your bills. A new law goes into effect this month that bans advance fees for debt relief services, and requires that debt settlement companies deposit customer payments into insured accounts with appropriate customer access to funds.
- If you are behind on your debts, find a reputable bankruptcy attorney or non-profit credit counselor to help you resolve your debt issues.
- Contact your local Better Business Bureau or State Attorney General’s office for information about a company before you sign any checks.
- Non-profit credit counselors won’t bully you into debt settlement plans. Instead, they tailor a debt management plan for each individual consumer. In most cases, individuals are given a debt repayment plan they can afford, with no fees or the need for debt consolidation.
Legitimate sources of government funding may be found through the agency’s own website. The U.S. Department of Housing and Urban Development (HUD), for instance, has received stimulus funds and is disbursing the money through neighborhood stabilization grants. Other government agencies may also have funds to assist you, but you should deal directly with their local representatives.