Investigators say unscrupulous debt settlement companies easily target people with high credit card debt or financial troubles.
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One company made a fortune off customers who were already in financial bind.
Authorities say the debt settlement firm in this case asked its clients to sign a contract and trust the company to manage their debt.
The company advised clients to, "Stop talking to your creditors. Make one monthly payment to us and as long as you can afford to make one monthly payment to us, sign a 3 year contract or a 4 year contract whatever works for you and in that time all of your debt will be paid off and you won't have to worry about it," explained US Postal Inspector Robert Clark.
The company collected more than $2 million from 1,200 customers, but didn't pay off any of their debt.
"Some of the victims we have spoken to admitted, 'I didn't even ask what the fees were,' so enamored with the fact that they could stop paying off all the cards and one affordable monthly fees," Clark said.
Postal inspectors say there are ways to determine if a debt settlement firm is legitimate.
"If they disclose all of the fees up front and they aren't trying to rush you through the contract it may be a more legitimate business," Clark said.
Also, you should know that there's a new law in place that requires debt settlement firms to meet with you in person to sign a contract. So if a company emails you a contract, that's a red flag.
And also keep in mind that you can negotiate payment terms with your credit card company on your own.
"Contact the credit card company that should be the first step and say hey look this is my situation can you work with me? A lot of times they will agree to do different things for you to help you because in the end they want to be paid," Clark said.
Right now, for-profit debt settlement companies can't operate in Georgia, but a bill has been introduced at the state capitol to change that.
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