Debt consolidation scam

“Clear Your Debt” actually clears victims’ bank accounts

Kimberly Donaldson couldn’t handle staring at a stack of unpaid credit card statements one more day. So when Clear Your Debt promised to negotiate settlements with her creditors, she thought they were the answer to her prayers. They even claimed to be a “Christian” organization--yet another reason Kimberly felt comfortable giving them her personal financial information.

But once Kimberly turned over all of her banking and credit information, she never heard anything from the company. They began withdrawing nearly $700 a month from her checking account, but she had no idea where the money was going.

It certainly wasn’t going to her creditors. They began calling her at work, demanding payments. Some even threatened to sue her.

Kimberly called Clear Your Debt for answers, but says the company wouldn’t take her calls or return her emails. She turned to the BBB in Austin, TX and filed a complaint.

Clear Your Debt claims they successfully deal with both small and large amounts of unsecured debt and that their expertise is based on years of experience in the debt settlement industry. They further boast that their unique debt reduction strategies have helped customers nationwide successfully get their finances back on track.

But their file at BBB tells a different story. BBB has already processed 49 complaints against them. 15 more are still pending. And they all follow the same pattern:

• Consumers allege they are not notified that they are actually enrolled in the company’s debt settlement program. They are told they are merely filling out an application for the company to review and will be told later if they qualify. Consumers say monthly debits are made from their checking accounts without their consent or knowledge.
• Consumers are also concerned about a lack of communication between Clear Your Debt and their creditors. Many state they have been sued by creditors because of the company’s failure to provide promised services. Consumers complain their own phone calls and emails are not answered either.
• And finally, consumers claim Clear Your Debt does not honor their cancellation requests and continues to withdraw money from their accounts.

Clear Your Debt says their customers sign agreements that clearly spell out the terms and conditions of their services and that they state in that agreement that even though they do everything they can to negotiate settlements, creditors may still threaten to sue their customers.

Kimberly is now considering closing her bank account and hiring an attorney to handle her debt. She says she may even have to file bankruptcy.

Red Flags That Signal Trouble - BBB says watch out for a company that:

• Demands that you provide account numbers or other financial details before it will discuss its services or fees. Reputable credit counseling agencies are happy to provide free information upfront about their services.
• Boasts that it can "lower your monthly payments by 30 to 50%." This bold statement is rarely, if ever, true.
• Promises that it can "get you out of debt easily." This is an irresponsible advertising claim. Getting out of debt is rarely an "easy" task. Avoid counselors who promise a quick and easy way to fix your credit problems.
• We won't need much time. Steer clear of any agency that claims it can evaluate your situation in just minutes, or that offers to do so quickly over the phone. If services are provided over the phone, make sure the counselor is evaluating your personal situation, and not rushing to provide generic advice that could apply to any consumer. Experienced counselors may want to spend close to an hour with you reviewing your financial situation before recommending how to address your financial condition, and may offer follow-up sessions.
• Claims that it can remove negative information, such as bankruptcy, from your credit report. It is illegal to make such a representation if the negative information reflects your true credit history. Accurate information cannot be removed from a person's credit report.
• Issues a blanket recommendation for a debt management plan. DMPs are not for everyone. Do not agree to establish one unless and until you have reviewed your personal situation with a certified credit counselor who recommends such a plan and then customizes the plan to best manage your debt.
• Requires "voluntary" contributions. Required "voluntary" contributions are not voluntary!
• Is reluctant to provide the organization's business name and address. This is a clear sign of impending fraud. A toll-free telephone number or e-mail address is not sufficient. Scam artists typically avoid providing their physical location to thwart law enforcement detection.
• Insists that you make an immediate decision. Reputable credit counselors will permit you time to evaluate their offer, shop around and make a determination that best suits your financial situation. As you are doing your research, however, remember that timing is critical when addressing your financial situation. Delays can cause your circumstances to worsen.