Protect yourself
- Debt settlement companies cannot legally charge fees before they settle at least one of your debts.
- Be wary of guarantees, pressure to sign quickly, or claims of a new government program.
- Your savings for settlement must stay in an account you own and can withdraw from anytime.
- Report suspected scams to the FTC and your state attorney general.
In this article
The rules every company must follow
- No fees until a debt is settled and you have paid under it
- Clear disclosure of time, cost and negative consequences
- You own the dedicated account and can withdraw anytime
- The account administrator cannot be owned by the company
Requirements from the FTC Telemarketing Sales Rule for debt relief services.
Debt relief scams target people when they are most stressed and most hopeful. Knowing the federal rules makes most scams easy to spot.
Check any company against these seven warning signs before you share account numbers or pay anything.
7 warning signs of a debt relief scam
- β Charging fees before settling any of your debts
- β Guaranteeing to cut your debt by a fixed percentage
- β Promising to stop all calls and lawsuits
- β Claiming a new government program will pay off credit cards
- β Telling you to stop talking to your creditors entirely without explaining the risks
- β Pressuring you to sign today
- β Asking you to send money to an account the company controls
Questions to ask any debt relief company
What are all your fees, and when do I pay them?
Get the full fee schedule in writing. No fees should be charged before a settlement.
How long will the program take?
The company must tell you before you enroll.
What happens to my credit and could I be sued?
An honest company explains these risks clearly.
Who holds my money?
It should be an insured institution not owned by the company, in an account you own.
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Debt relief rules and programs vary by state. Add your ZIP code to see options that serve your area. Looking is free and commits you to nothing.
If you think you were scammed
- Stop any further payments and close or freeze accounts you shared.
- Gather contracts, emails, call notes and payment records.
- Report it to the FTC at ReportFraud.ftc.gov and to your state attorney general.
- If you paid by card, ask your card issuer about disputing the charge.
- Contact your creditors directly to find out the real status of your accounts.
Nonprofit credit counselors can review your situation at little or no cost. Read our debt management plan guide.
Frequently asked questions
Are all debt relief companies scams?
No. Legitimate companies exist, but they must follow federal rules, including no upfront fees for settlement.
Is there a government debt relief program for credit cards?
No federal program pays off credit card debt. Claims otherwise are a red flag.
Where do I report a debt relief scam?
The FTC at ReportFraud.ftc.gov, your state attorney general, and the CFPB.
Can a debt relief company take my money and not settle?
Your deposits must sit in an account you own and can withdraw from. If a company controls your money directly, that is a warning sign.
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