Red Flags to Look Out for If You Are Thinking of Debt Counseling
Debt counseling is a real service and can be incredibly helpful for people with large debts, including student loans. However, there are many scammers who use these services. Student Loan Hero explains how to spot a scam.
The U.S. Department of Education offers free federal student loan advice , and there are a number of nonprofit loan advisory services that can help you plan for paying off your debt. The FTC offers some advice on choosing a reputable debt advisor, but at least they must be registered with the National Fund for Credit Counseling ( NFCC ) or members of the Association of Independent Consumer Credit Consulting Agencies ( AICCCA ).
In addition, you need to make sure that you are not fooled for fear of multiple red flags.
Student Loan Hero explains:
High commissions early on
One of the differences between nonprofit consulting services and scammers running on a commercial platform is the fees they charge. If you find a service that charges a high commission right from the start, chances are your money will be pooled effortlessly to help you with your debt.
Marketing, name or logo is very similar to government source
To gain the trust of lowly, vulnerable people struggling with debt, many illegal companies may use words like “national” or “federal” in their names to make them sound more formal.
However, if they are not affiliated with the Department of Education or do not have a .gov url extension, then be careful.
You are asked to provide confidential personal and financial information
If you contact a student loan advisor and they ask for your Social Security number, Federal Student Assistance PIN, bank account information, or any other sensitive personal or financial information, you are likely to be exposed to fraud. (and potential identity theft.) … Be especially concerned if you are asked to sign a third party authorization or power of attorney for one of these organizations; You could give these scammers whatever you have.
To find out more about the alarms and tips for choosing a legitimate debt counselor, click on the link below.
Student Loan Advice: A Helpful Service Or Another Scam? | Student loan hero