In Deep Debt? Beware of the Quick Fix

COLUMBUS, GA (WTVM) - "When someone claims that they can negotiate your debt down by 50%, that's probably a red flag," says Lisa Scrivner of Consumer Credit Counseling.

In 2008, complaints to the Better Business Bureau about companies claiming to help consumers manage their debt spiked nearly 19%.

"People getting in trouble with companies who are making grand claims about being able to make debt go away, or to eliminate debt, or we can negotiate it or consolidate it for you," explains local BBB President Leonard Crain about the potential scams.

That's why experts say as consumers continue to get bombarded with information, it's critical to understand exactly what the companies are offering.

For example, debt elimination, that's when companies claim credit lines are illegal.

"Debt elimination generally is, comes up with outlandish frauds and changes and illegal methods being used by the companies that tell you and promise they can eliminate your debt," says Crain.

Crain says it's not true and consumers are often charged for services up front.

Then there's debt consolidation.

"Basically, you would be getting a loan and paying off a lot of small, maybe, debts that you have and you would have one loan to pay that back," says Scrivner.

But be careful, experts say consolidation companies often tack on high fees and interest rates.

Another is debt negotiation or settlement.

"What happens a lot of times is it's still a re-payment plan and it may take up to two to four years to actually pay out the debts," adds Scrivner.

Plus, Scrivner says some debt settlements also show up on credit reports as debt not being paid in full.  In addition, consumers are sometimes taxed on what the company writes off.

"People really need to investigate this type of service because it is not always what it appears on the surface," says Scrivner.

A better option, experts say, is to visit an agency like Consumer Credit Counseling.

In Columbus, they offer what's called debt re-payment or management plans.

Basically, consumers make one payment, and consumer credit counselors send it out to the creditors.

Scrivner says sometimes creditors will even work with them to eliminate over the limit fees and get customers lower interest rates.

She also says those plans are not just for credit card debt, they're often used to pay off medical bills.