Not everyone has a perfect credit score and a large number of people struggle with some form of debt. Many California consumers seek out companies that can offer them debt relief. Unfortunately, not all debt relief companies are reputable and some have scammed customers out of a considerable amount of money.

Often, consumers who have accumulated a massive amount of outstanding debts are financially strapped. They become even more financially strapped when a company they believe is helping them out of their dilemma ends up pushing them back even further. Unscrupulous debt relief companies usually lead consumers to believe that they will negotiate reduced payments with the creditors on their behalf. Desperate consumers eventually end up falling into this trap and wind up giving thousands to the company, only to discover the company never paid toward any of the debts.

There are red flags that consumers can watch out for. One such red flag is the company persuading the consumer to stop contacting their creditors personally. Other red flags are charging any up-front fees for services and claiming that the debt collection company can put all collection calls to a halt.

Many credit counseling companies offer California consumers free information on their services. Not every debt settlement company is a scam and many companies that offer debt relief services can help consumers get their credit on the right track. Being knowledgeable on managing credit and contacting local agencies on a company’s legal standing can help individuals protect their finances and can also have a considerable impact on an individual’s future credit rating. For those who are too far in debt for this to be an option, bankruptcy protection may become the path back to financial freedom.

Source: lacrossetribue.com, Column: Beware of debt relief scams, Julie Lassa, Jan. 10, 2014