LEXINGTON, Ky. (WKYT) - Millions of Americans are still struggling with growing debt after the economic downtown. If you're looking for help, be leery of debt settlement groups. Some consumers have done business with them, only to end up further in the red.
"Basically, this company was saying 'okay, you have all this debt and we can settle it for approximately 45% of the debt'," says U.S. Postal Inspector Robert Clark. "They tell the customers stop making the monthly payments to the creditors, stop speaking to the creditors as long as you can make one monthly payment to us."
Customers are asked to sign a three-year contract. If they do, all their debt will be paid off. While it sounds like a great deal, there is a catch. The deal has lots of hidden fees and charges.
"Some of the victims that we've spoken to admitted (they) didn't even ask what the fees were because they were so happy to stop paying all the credit cards and pay one monthly fee that was affordable," says Clark.
Relief quickly turned to anger when customers realized the money they were paying had not been sent to creditors.
"A lot of the victims called once they realized there was no money in their escrow accounts. The company would then point to the stipulation in the contract that says they're allowed to collect these fees," says Clark.
Postal inspectors say, in one case, there were more than 1,300 victims and $3 million in dispute. Customers had nowhere to turn.
"A lot of these creditors filed lawsuits against these people. A lot of these people had to go to court. They were sued and had judgments against them and a lot of them had to file for bankruptcy," says Clark.
Experts say you need to read contracts thoroughly. If you don't, you could end up being a victim of a scam.