North Carolina Department of Justice

North Carolina Department of Justice

North Carolina Department of Justice
Submit this request

Avoid Scams While Resolving Debt in the New Year

1/8/2014

By Attorney General Roy Cooper

Many people start the New Year wanting to get their finances in order. If you’ve resolved to get out of debt in 2014, there are many resources to help you – but also pitfalls to avoid.

You may be tempted by ads that promise to cut your debts or negotiate lower payments. But there’s usually a catch: hefty fees you’re asked to pay before the company will help you.   In many cases, people who pay money upfront find that the company does little or nothing to actually resolve their debts.

North Carolina law prohibits companies from charging advance fees for debt relief work and we’ve taken action against dozens of these outfits in recent years, shutting down violators and winning refunds for consumers

We recently went after World Law Group, one of the largest debt settlement firms in the country, and won a court order that bars them from soliciting or enrolling any new North Carolina customers, collecting any advance fees from North Carolina consumers and engaging in the unauthorized practice of law in North Carolina. Our investigation revealed that in 2010 the firm collected more than $4.1 million for debt settlement from North Carolinians – and used less than $600,000 of it to actually pay off their debts.

There are better ways to safely managing your debt:

  • Start by contacting your creditors to see if they will work with you to set up a manageable repayment plan.  

  • Consult with a non-profit credit counselor. To find a legitimate credit counselor in your area, visit www.nfcc.org or call 1-800-388-2227.

  • If you’re able to work out a repayment plan, remember that credit counselors can charge no more than $40 in setup fees and no more than 10 percent of your monthly payment in administration fees, up to a maximum of $40 per month.

  • If a payment plan doesn’t work for you, consider discussing your options with a local bankruptcy attorney. 

Once you have your finances in order, protect yourself by keeping an eye on your credit report. You can get one free credit report a year from each of the three credit reporting bureaus at www.annualcreditreport.com.  If you see something that isn’t yours, you could be the victim of identity theft.

Even if you owe legitimate debts, keep an eye out for scams that try to get you to pay debts that aren’t real. Scammers may claim you owe money on your power bill and threaten to cut off your electricity if you don’t pay right away, or they may pretend to be with the I.R.S. and say you must pay back taxes immediately.  Sometimes the callers even claim to be with law enforcement and threaten to arrest you if you don’t pay some imaginary debt.

If you get similar calls, hang up and report them to my office.  For more help and tips, or to report a scam to the Consumer Protection Division, visit www.ncdoj.gov or call 1-877-5-NO-SCAM toll-free within North Carolina.