What is Debt Consolidation and is it Worth it?

Last week I spoke with someone who told me something surprising. She had hired a debt consolidation company to settle her debts and it had actually settled one. But was it actually worth it for her to hire the debt consolidation company? Keep reading to find out. 

Debt consolidation companies use many tactics to snare their customers, most of which disregard the truth and target those most in need. An ad currently playing on the radio asserts that Congress has passed a stimulus bill which allows people to settle their credit card debt for pennies on the dollar. This is absolutely false. Congress passed no such bill. (Of course, people have always been free to try and negotiate with their credit card companies, so that is true.) 

The way the debt consolidation companies work is as follows:

 You sign a long contract with small print agreeing to have a certain amount of money drawn directly out of your checking account each month. The company takes this money. It also writes letters to your creditors telling them that they are interested in settling the debts. This causes the creditors to send future letters to the company, not you, giving you the sense that your debts are being handled.

However, these companies do NOT send any money to your creditors. After 6 months or so, the creditors have not been paid, your credit is ruined and creditors stop dealing with the consolidation company and again - look to you for payment.

These companies routinely get shut down by various state attorney general offices, but the same people behind the companies simply start new ones – doing the same rotten things, with a different name. They are not really interested in settling your debts but in collecting the money you pay them. Countless Americans have paid millions of dollars to these companies. It's unfortunate because these people have the best of intentions. 

The FTC is finally taking some action to help people avoid these companies. Hopefully, someday, laws will be passed to completely put them out of business. They are one of the most prevalent scams of our times and prey on people trying to survive in a tough economy.

 

Additionally, don't confuse debt consolidation companies with local consumer credit counseling or other nonprofit entities that help with debt issues. These entities can genuinely help people in need. 

Then there is HELPS nonprofit which is designed for seniors and disabled persons on Social Security, disability and protected pensions who do not have sufficient income to pay their debts. HELPS gives these persons peace from harassment and the freedom to use their income for their needs. 

By Rex Daines

Testimonial on HELPS from Ron B.

"They've done a wonderful job for me and I have no complaints" -Ron B.

Transcript: Other seniors should know what helps can do for them because it's a fairly new program and they're not aware of it. I certainly wasn't and that's one of the reasons that everybody should know about this! The constant harassment and some of the nasty people that are on the other line of that phone are eliminated completely. You have no more stress. And I can't press that enough--no more stress from creditors--it's all taken care of.

And a big thank you from the HELPS team to our client Ron for doing this interview with us!

Common Scams Targeted at Seniors

“Work at home and earn extra money!” Sounds good doesn’t it? Particularly when we could all use a little extra cash. Unfortunately, the vast majority of companies that offer “work at home” opportunities are simply trying to take your money. I recently discussed this topic with Patricia Swansick, an investigator with the Oregon Department of Justice. In a recent case, Mrs. Swansick had been able to recover a portion of what had once been one senior’s life savings. The senior had been talked into taking on significant credit card debt by telemarketers to help finance his new "Home Business".

All seniors need to be on the lookout for scam artists. Here are some commons signs that you might be getting scammed:

Sweepstake notices, free gift offers. 

Once a senior takes the bait for one scam, thieves sell the person's name, address and telephone number, and the fake mailings proliferate. These mail scam are of two types, the "pay to play" scheme or the "You've won! Here's your check" scam. The first ploy entices seniors to buy inexpensive trinkets or magazine subscriptions (which they really do receive) in order to have their name entered in the contest. In the second case, the elderly person receives an authentic-looking check, with notification they've already won the Jamaican (or another foreign country) lottery. What the senior should do: shred both offers. It's illegal for companies to require you to buy anything to enter a sweepstakes. If they do, they're scammers. It's also illegal for Americans to enter a foreign country's lottery. These scams require the "winner" to wire back a share of their "winnings" (which will initially clear the bank but later prove counterfeit) for taxes or administrative fees. The advice from HELPS is to simply tear these up without even opening them in the first place.

Telephone Sales Calls 

“Scammers know senior citizens answer their phone, and are reluctant to hang up on anyone‖, says Jean Mathisen, director of AARP's Fraud Fighter Call Center. And as with junk mail, rip-off artists sell names and phone numbers of seniors who prove to be phone-receptive. HELPS advises you to simply say no thanks and hang up the phone. Resist the temptation to engage in a conversation.

Identity Theft 

Be wary of any calls or emails requesting personal information. One ruse the thieves use: They tell the senior they need a bank account number so they can deposit big prize money in the account.

The grandparents scheme 

The senior answers his phone and a young voice says, "Hey, Grandpa, it's your favorite grandson, and I'm in trouble." Senior says, "John, is that you?" The caller responds, "yes, it's John," he's calling from a friend's cell phone and he's been in an accident. He's out of state and needs his grandpa to wire some money right away.

The discount prescription scam 

Callers offer seniors prescription drugs at 50 percent off. The catch: it requires a $200 "membership fee" to join a discount club, along with seniors' credit card numbers. Or the drugs never arrive as promised, or the "medicine" is actually a generic herbal replacement.

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Other common scams that target seniors include ―Mystery Shopper, solicitations for donations, Medicare enrollment, mortgage foreclosure relief, and home or auto repair scams. We want our clients to know that there are more scam artists operating than ever before. If it sounds too good to be true it’s because it isn’t true. 

The Basics of Housing Assistance

Housing assistance includes programs such as Subsidized Housing, HUD Public Housing Program and Section 8 Housing.

Public housing was established to provide low cost safe rental housing to low income families including the elderly. What this means is that you can rent good housing, often for very little money. Sometimes the rent could be, for example, as low as $25 per month or 10% of your income and the government pays the difference. Many HELPS clients are eligible for subsidized housing and might consider this option to help stretch their budgets. These housing programs must meet certain standards and are often very attractive and safe. Here is how it works...

You will need to call your local Housing Authority to determine if you qualify. You can call one of the following numbers to find out who is your local Housing Authority:

Portland, OR—971-222-2600

Seattle, WA—206-220-5101

Spokane, WA—509-368-3200

Phoenix, AZ—602-379-7100

Tucson, AZ—520-308-3007

Boise, ID—208-334-1990

Salt Lake City, UT—801-524-6070

New Orleans, LA—504-671-3000

Denver, CO—303-672-5440

San Francisco, CA—415-589-6400

Los Angeles, CA—213-894-8000

Sacramento, CA—916-498-5220

San Diego, CA—619-557-5305

Dallas, TX—214-767-8300

Houston, TX—713-718-3199

San Antonio, TX—210-475-6806

Don’t see your local number? You can easily look it up here: http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/pha/contacts or feel free to send us an email at info@helpsishere.org and we'll add it to the list!

The application process is simple. They will ask some questions and require some information. They may even visit you to help if it is needed. Remember, they are there to help you. They will ask some questions at first to see if you qualify. There is usually a waiting list so the sooner you apply the better. You can stay in this housing indefinitely as long as you comply with your lease. Preference is normally given to the elderly.

HELPS encourages you to look into these options if housing is a problem.