GAO Investigation Critical of Debt-relief Firm Practices

Anyone who has ever struggled under the burden of significant debt understands the lure of debt-relief programs. They often make promises too attractive to ignore. Eliminate debt! Reduce all your interest rates! Stop creditors for good! However, there is definitely a dark side to debt relief that has caused thousands of consumers to become victims.

The Government Accountability Office (GAO) has turned its attention to debt-relief companies to combat financial predators who take exorbitant fees from their customers and fail to deliver anything in return. According to the agency's report, "fraudulent, deceptive and abusive" practices pervade the debt-relief industry, and naive borrowers must beware.

During the GAO's investigation, it discovered a number of unscrupulous activities among debt-relief companies, including:

  • Charging enormous up-front fees
  • Running fraudulent advertisements claiming to be part of government programs
  • Providing inaccurate statistics about their success rates
  • Accepting "credit card payments" through firms and keeping the money
  • Encouraging consumers to stop paying on their debts

The GAO ran an undercover investigation in which it contacted debt-relief programs to ask probing questions. The results of the investigation indicate that many such programs are out to take cash from the desperate with no plans to actually help anyone.

Lawmakers are motivated to make changes to the debt-relief industry and to protect unwitting consumers who might find themselves with even more debt after contacting one of these companies. Regulating debt-relief companies might help keep the more predatory scam artists out of the market.

When you are faced with burden of debt, working closely with an attorney who will explain clearly all rights, options and consequences can help to ensure that you make decisions that are in your best interests. Contact an experienced bankruptcy attorney today to schedule a consultation and case evaluation.