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“They think they have found a solution to their financial problem:” Avoiding debt consolidation pitfalls

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HOUSTON (WITI) — People who are trying to get out of debt can often be vulnerable to scam artists.  But, there are simple and affordable steps you can take to pay down your debt.

They look tempting — companies promising to help consumers avoid bankruptcy by consolidating debt.

"They think they have found a solution to their financial problem," said U.S. Postal Inspector Leslie McClain.

In truth, many of these websites and companies are not only expensive, but also engaged in fraud.

"They are not even registered with the FTC. They charge fees to customers that they shouldn't have and sometimes they just walk away with your money," explained McClain.

The Federal Trade Commission regulates the debt settlement industry.

Experts say added service fees, lack of accountability and high monthly payments are some of the pitfalls of these debt resolution companies. Consumers trying to do the right thing could find themselves in even more trouble if they don't do their research.

"They find out that they have spent thousands of dollars and this money hasn’t gone towards negotiating anything with the companies and, often times, even the operators have walked away with their money," McClain said.

The most important thing anyone with debt can do is meet face-to-face with someone versus doing anything online.

"Consumers should meet with a certified credit counselor before deciding on an action plan. Many of these are non-profit and don’t charge a fee. They may suggest bankruptcy, debt settlement or other options," advised McClain.

At that point, consumer will likely learn they have more control than they think.

"If consumers decide to go the debt settlement route, they can contact the companies directly to negotiate the terms or fees or any amount that they feel they have to have lowered," McClain said.

If those negotiations don’t work, a debt settlement lawyer is another option.  That lawyer can be held accountable if he or she fails to legitimately assist debtors.

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