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Rate reduction? Instant debt relief? Up-front fee? Hang up!

Are you in debt? Are you suffering from annoying or harassing calls from creditors? Does a debt relief organization's promise to "reduce your rate by 6 percent for only a $500 processing fee" sound like the relief you need to get things back on track? Hang up the phone! You could be the victim of a scam!

The FTC and State of Florida recently filed a lawsuit against a husband and wife for their telemarketing scam involving several phony businesses. According to the complaint, the duo took in millions of dollars making promises exactly like the ones above to innocent consumers. They were promises that they never intended to keep.

The pair targeted individuals with significant credit card debt. Their fake companies had official-sounding business names like E.M Systems & Services LLC or KLS Industries LLC, doing business as Satisfied Services Solutions LLC.

The callers had specifics, like the amount of their credit card debt and the names of their lenders. The callers gave consumers their license or badge number. They claimed that they had longstanding "relationships" with the consumer's individual lenders. They said they could obtain very specific rate reductions or savings within a certain amount of days. The consumers paid fees as high as $1,500 up front.

The consumers wound up in a worse financial situation when the callers failed to get the results they promises or even make an attempt.

When you are struggling with debt, offers of a quick fix can sound great. They can be very tempting, but they are rarely the answer and often a scam. Even legitimate debt relief organization cannot provide the lasting relief you could get through bankruptcy.

Here are a few things you should keep in mind to protect yourself from both debt relief scams or debt collection scams:

  • Never give up your personal information over the phone. This is a hard rule for any solicitation or collection call. If it is your lender, you have their contact information. Call them back. Better yet, you can have an attorney work with lenders on your behalf.
  • Never pay an upfront fee. Period. Discuss your situation with a bankruptcy attorney first about your entire financial situation and all of your options.
  • Never trust specific guarantees. No one can promise specifics, like a 6 percent rate reduction or a $5,000 savings in just 90 days. Every case is unique, and your relief depends on your individual circumstances. The only promise anyone can make is that "You have options to make your financial life better" and that he or she has the resources and skill to help.
  • Defaulting on a mortgage or other loan is not a crime. If a collector or anyone else threatens criminal sanctions relating to your nonpayment, hang up the phone and talk to a bankruptcy attorney.
  • Collectors are required to follow strict guidelines. Debt collectors do not have free reign to harass, threaten, make false statements or leave personal information on a message. The Fair Debt Collection Practices Act (FDCPA) prohibits these actions and more. You don't have to know the law. You can talk to a lawyer when you feel harassed, and the lawyer can tell you if the collector is in violation of the law.

In reality, the best way to protect yourself from scams, harassment or further accumulation of debt, is to talk to an attorney. You can meet with one in person, in your area. You can even get answers to your questions and a comprehensive review of your situation and options for free, but do your research first - not all attorneys offer free initial consultations.

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