If you feel in over your head with debt, a company’s promise to lower your mortgage or student loan payment might seem like a lifeline. Unfortunately, dishonest companies promising debt relief can make a bad situation worse.
Today the FTC announced it filed charges against Good EBusiness for debt relief schemes that targeted people struggling to pay off mortgages and student loans. People paid thousands of dollars in fees, the FTC alleges, only to find themselves out the money with no relief in sight.
According to the FTC’s complaint, telemarketers working under various company names, including Student Loan Help Direct, used a few different pitches to trick people into paying for empty promises.
For homeowners, the defendants promised to significantly lower people’s payments, reduce their mortgage interest rates, and prevent foreclosure proceedings. According to the FTC, the company told people to stop making mortgage payments, but pay the company instead. But once someone paid, they never got the promised modifications — or the refund the company had guaranteed. Many people fell further behind on mortgage payments, racked up penalties and late fees, and risked foreclosure.
The truth: it’s illegal for a business to ask you to pay for mortgage relief services until you’ve gotten an offer from the lender and accepted it. If you’re having trouble paying your mortgage or have gotten a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule. Also consider other foreclosure prevention options, including reinstatement and forbearance.
Student loan debt relief
When it came to student loans, the company told people it could lower their monthly student loan payments, wipe out their student loan debt entirely, and remove wage garnishments. But according to the FTC, after people paid, none of that happened. In fact, the FTC says many people found out the company never even contacted their lenders.
The truth: you can apply for a new repayment plan for federal loans for free. If you have federal loans, debt relief companies can’t do anything for you that you can’t do yourself. Learn more at StudentAid.gov. For help with private loans, contact your loan servicer directly. And never pay an up-front fee for the promise of debt relief.