Debt Relief Path

How to spot a debt relief scam

Federal rules ban the most common debt relief tricks. Knowing them is the fastest way to tell a real program from a scam.

By the Debt Relief Path Editorial Team ยท Updated November 9, 2026

Red flags

  1. Fees before any debt is settled. The FTC's Telemarketing Sales Rule bans debt settlement companies that sell by phone from charging you until they've settled at least one debt and you've made a payment under it.
  2. Fees before you get a mortgage modification offer. Federal rules ban mortgage assistance companies from charging you before you've received and accepted a written offer from your lender.
  3. Guarantees. No one can promise your debt will be cut by a fixed percentage or that a lender will approve a modification.
  4. "New government program." There's no federal program that forgives credit card debt. Scammers use government-sounding names and seals.
  5. Told to stop talking to your creditors or lender. Especially with a mortgage, cutting off contact can cost you your home.
  6. Pay the company instead of your mortgage servicer. Never send mortgage payments to anyone except your servicer.
  7. Pressure to sign today or before you've seen the fees in writing.
  8. Asked to sign over your deed or give power of attorney over your home.
  9. The money isn't in your name. In legitimate settlement programs, the dedicated savings account is yours, and you can get your money back if you quit.

What a legitimate provider will do

  • Tell you which debts qualify, how long the program will take, and the total fees, in writing, before you enroll.
  • Explain the risks: credit damage, possible lawsuits and possible taxes on forgiven debt.
  • Hold any required state licenses or registrations.

How to check a company

  • Search the company's name with "complaint" or "lawsuit."
  • Check your state attorney general's office and your state financial regulator.
  • Look up complaints in the CFPB's public complaint database.

Where to report a scam

Report to the FTC at ReportFraud.ftc.gov, the CFPB at consumerfinance.gov/complaint, and your state attorney general. For mortgage scams, a HUD-approved housing counselor (800-569-4287) can also help, free.

We refer people only to partners that follow the federal no-advance-fee rules and give costs in writing first. How we choose partners.

Questions people ask

Is it a scam if a company charges a monthly fee to hold my savings?

Account maintenance fees charged by the independent account provider can be legal, but they must be disclosed. The settlement company's own fee can't be charged until a debt is settled.

Are nonprofit credit counselors legitimate?

Many are. Look for an accredited agency and ask about fees. Being nonprofit doesn't guarantee it's free.

Can I get my money back from a scam?

Sometimes. Report it quickly to the FTC, CFPB and your state attorney general, and contact your bank or card issuer about the payment.

General information, not legal, tax or financial advice. Debt Relief Path is a free referral service, not a lender, law firm or debt settlement company. Disclosures.

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