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If you’re deep into student loan debts, you’ve probably heard the pitch on late-night TV ads and radio commercials where debt relief firms promise to make your student loan debts go away. While not all of these debt relief programs are scams and it’s not clear whether or not their sales tactics are illegal, some people think they should be outlawed. For example, the National Consumer Law Center (NCLC) believes there should be a ban on these ads because the debt settlement companies often load unnecessary fees on to people who are already struggling with debt.
If not illegal at least deceptive
The claims made by some of these debt relief firms may not be illegal but they may be deceptive. This is because they usually don’t disclose that “their” programs are really federal government programs that any person can access him or herself at no cost.
What the NCLC has found is that many of these programs not only require up-front fees, they charge ongoing monthly service fees as well. This is despite the fact that student loan consolidations really require only a one-time process.
You have options
There are actually numerous ways that you could lower your student loan debt burden. You might be able to get a deferral, forbearance or you could consolidate multiple loans into a new one with a lower interest rate. However, obtaining this kind of relief can be seriously confusing. This is why many people turn to debt relief companies. Even the NCLC admits that getting relief from student loan debt is rarely easy. Government loan programs can be seriously complex and you may end up confronting an impassable bureaucracy. Plus, there are not many reliable resources you can turn to if you need help.
Reselling government programs
Where many consumers are misled is that when they turn to a debt relief company, their debt is characterized as unique. In fact, what these companies are doing is just really reselling government programs. Also, according to the NCLC, many debt settlement companies are guilty of giving out bad or inaccurate advice regarding bankruptcy laws, credit reports, loan rehabilitation and other issues.
Ethical debt settlement companies
If you contact a debt settlement company that promises to eliminate your student loan debts, run away. No ethical debt settlement company will promise this. If you have multiple student loan debts, a debt settlement company might be able to help by consolidating them. This is something you could do yourself but it could be confusing and time-consuming. For this reason it might be worthwhile to pay a debt settlement company to handle this for you. Plus, an ethical debt settlement company such as National Debt Relief could negotiate settlements of your other unsecured debts, which would free up money you could use to pay down your student loan debts.
How to choose a trustworthy debt settlement company
If you would like to engage the services of a debt settlement company, there are ways to evaluate them. For example, it should belong to organizations such as the US Chamber of Commerce and the American Fair Credit Council (AFCC) and should be accredited by the Better Business Bureau. And it should have a lot more positive reviews online than negative ones.