If you have student loans that have been difficult to pay, it may be tempting to accept an offer from a for-profit company promising to help reduce or even erase your debt. But according to an investigation by NerdWallet, many of these companies engage in questionable practices that may make matters worse for you.
Check the list
If you are considering signing up with one of these companies, or have already done so, it’s a good idea to check to see if that company is on the “watch list.” There has not been robust enforcement against these companies, and prosecution in one state doesn’t prevent that company from continuing to operate in other states.
Uncovering the fraud
Student debt relief companies can fleece borrowers in a number of ways, including:
- Charging students for enrolling them in free government programs
- Gaining power of attorney, accessing students’ accounts, and then letting them lapse
Companies appear on NerdWallet’s list if they have been accused or convicted of illegal activity at the state or federal level. But that’s not the only thing that will get a company listed. Companies may also be listed if:
- They are run by someone who has been accused or convicted of running another company that has engaged in illegal activity
- They are run by someone who has their own significant debts or a criminal conviction
- They have liens from unpaid taxes
- They have a D or an F rating by the Better Business Bureau
Don’t make things worse
The point of debt relief is to help borrowers manage overwhelming bills, not create additional financial problems. If you have concerns about an existing debt relief company, or want to investigate one that you’re thinking of signing up with, speak with an experienced debt relief lawyer first.