Have you ever seen commercials or ads for "debt relief" or "debt consolidation services" and wondered if these companies are real? Some are scams, but many offer bad financial advice for high fees. Mounting debt and unpaid bills can be very stressful, and debt relief companies know they can take advantage of those in a vulnerable place in their lives.

Spot a Scam

The best way to spot a scam is if a "debt relief company" contacts you first or asks for fees upfront. If a company promises to get rid of all your debt, but you must pay them before they do, it is a sure sign that you are being lied to. Scammers may even say that you are eligible for a new government program to bail you out, and they can help you apply for a fee.

More Harm than Help

There are legitimate debt relief companies, but they often cause more harm than help. Beware of debt relief companies advising you to halt all bill payments and communication with creditors. They may propose depositing your funds into an account they manage, promising to clear your debt for a fraction of the amount. However, this strategy can harm your credit rating and lead to more late fees. Many creditors are wary of working with debt relief companies as it can potentially worsen the debtor's financial situation. Stay vigilant to avoid falling into deeper debt.

Real Help is Out There

Our best advice if you are struggling with debt is to call your financial institution or creditor and ask if they have any debt relief programs. They can usually set you up with a non-profit debt relief program, or you may be able to negotiate the debt directly with the creditor.

Credit counselors are also a great option. They can help create a plan to lump all your debt into one payment, often at a lower rate. But before you commit, do your due diligence. We recommend checking the Washington State Attorney General's website first to ensure it is a reputable company.