Debt Settlement; Too Good to be True?

We have all seen the TV commercials or heard the radio ads telling us, that we do not need to repay our credit card debts in full. Better yet, we actually have the right not to pay our creditors. Truth is we do have the right not to pay our credit card accounts. We also have the right not to pay our mortgage loan, our car loan or our electric bill. However, it is also true that our credit card companies, our mortgage lender, our car finance company, and our electric company all have legal rights to collect the money we owe them, including suing us in court, foreclosing on our home, repossessing our car, and cutting off our electric service.

So if the old adage “If it sounds too good to be true, it probably is” comes to mind, consider the following about these Debt Settlement claims.

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Payday Loans Disguised in Apps?

New apps offer payday loan-like services, but with a twist

Jonathan Raines needed money, so he downloaded an app that promised to “advance” his paycheck. He borrowed $100 and tipped the app $9, promising to repay the loan on his next payday.

But nine months later, Raines is still using the app, and he says he’s now trapped in a cycle of debt. He borrows about $400 each pay cycle, and the app lowers his borrowing limit whenever it detects that he might not be able to repay.

Raines’s story is not unique. A new class of online lending apps is offering payday loan-like services, but with a few twists. These apps, such as Earnin, Dave, and MoneyLion, do not charge interest or fees. Instead, they ask users to “tip” them.

These apps argue that they are not payday lenders because they do not charge interest. However, experts say that these apps offer a new set of tricks and terms that are designed to give the appearance of safety and modernity.

How these apps work

These apps work by monitoring users’ bank accounts and spending patterns. They also ask users to share other personal information, such as their time sheets and location.

When a user needs money, they can request an advance from the app. The app will then deposit the money into the user’s bank account. The user must repay the advance on their next payday.

If the user does not repay the advance, the app will not charge interest. However, the app may lower the user’s borrowing limit or even suspend their account.

The risks of these apps

While these apps may seem like a convenient way to get quick cash, there are a few risks to consider.

First, these apps can be addictive. It’s easy to get into a cycle of borrowing and repaying, and it can be difficult to get out.

Second, these apps can collect a lot of personal data about their users. This data could be used for targeted advertising or even sold to other companies.

Third, these apps are not regulated like traditional payday lenders. This means that users may not have the same protections if they have problems with their loans.

What to do if you need money

If you need money, there are a few things you can do before downloading one of these apps.

First, try to see if you can borrow money from a friend or family member. You can also try to get a loan from a bank or credit union.

If you can’t get a loan from a traditional lender, there are a few nonprofit organizations that offer zero-interest loans. You can also try to defer utility payments or seek credit counseling.

If you do decide to use one of these apps, be sure to read the terms of service carefully and understand the risks involved.

Things To Know About Debt Consolidation

Debt consolidation is a way to collect all your individual debts and lump them into a single loan. It works well to combine overdraft, credit card, and automobile loans. By consolidating your debt you only make one payment to one creditor.Usually, you can negotiate better terms, a lower interest rate, and quicker payoff times. But is debt consolidation always the best idea for you?

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Check for a recall before purchasing that car!

An auto recall means that a specific vehicle may not meet safety, operating or emissions standards. Recalls can be issued by the either the manufacturer or the Environmental Protection Agency (EPA), according to the Recalls website, which is provided for consumers by the government. Recalls are covered by the manufacturer at a same-make dealership free of charge.

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How Military Members Can Avoid Illegal, Unfair Debt Collection Efforts

The Association of Credit Counseling Professionals – ACCPros – Offers Tips for Servicemembers With Student Loans and Other Debts.

Members of the military face a host of enemies abroad: everything from terrorists and suicide bombers to inhospitable land and severe weather conditions.

Unfortunately, back at home, many U.S. servicemembers and their families must square off against a different kind of enemy: financial services firms and bill collectors that use aggressive, often illegal practices when trying to collect debts.

“The list of financial abuses that military families face is downright appalling,” says Judy Sorensen, president of the Association of Credit Counseling Professionals, ACCPros. “On a daily basis, many deal with harassing phone calls from debt collectors, predatory lending traps and wrongful foreclosures on their homes, not to mention widespread problems with student loans. This is the last thing our service men and women need after they’ve been out fighting for our safety and freedoms.”

To help combat these problems, Sorensen and the experts at ACCPros offer four tips to military members facing financial difficulties, especially with student loans.

Tip#1: Know your legal rights

“Part of the problem is that many U.S. servicemembers simply don’t know that they have various military protections to help them in areas such as their mortgages and student loans,” says Sorensen.

For example, under the Servicemembers Civil Relief Act of 2003, military members and their families are supposed to be protected from housing evictions. The Act also includes a stay of all court proceedings a bill collector might attempt, and a cap on loan interest rates, including a 6% ceiling on student loans.

Separately, the Military Lending Act caps payday loans and title loans at 36%.

Sorensen notes, however, that some payday lenders use loopholes to get around payday loan caps. She recently wrote about this abuse in an article on

Tip #2: Report abuses to the authorities

It’s not in your best interest to be silent about financial misconduct by any company with which you might do business. So Sorensen urges military members to report wrongful doing to the authorities, like the Consumer Financial Protection Bureau.

In April, the CFPB issued a report highlighting everything from dubious default judgments to wrongful debt collection activity against military members. The report concluded that more needs to be done to ensure that members of the U.S. armed forces receive the full protection of the law concerning their financial affairs.

That’s one reason the CFPB does track complaints. In fact, the agency says it received 14,100 complaints filed by military consumers between July 2011 and February 2014. Also, the number of complaints the CFPB received rose by 148% from 2012 to 2013. And the agency does act on these concerns.

For instance, the CFPB and other federal agencies are now investigating Sallie Mae over its handling of students loans held by military members. The CFPB says it is examining “unfair or deceptive” practices that violate the Servicemembers Civil Relief Act, and allegations of discriminatory lending and payment-processing issues.

“Statistics show that four out of 10 U.S. service men and women are now repaying student loans, and the average amount borrowed is about $26,000, so this is a major issue that must be addressed,” Sorensen says.

Tip #3: Utilize the Public Service Loan Forgiveness Program

Under the Public Service Loan Forgiveness Program, individuals employed by the military for a decade, or those who’ve been in specific public service jobs for the last 10 years, can have their federal student loans completely discharged.

Some of the public service jobs that qualify for this student loan relief are: police officers and firefighters, emergency management workers, and specialists in public health, including nurses and healthcare practitioners.

Tip #4: Understand how to get a student loan discharge

Those who received National Direct Student Loans and Perkins Loans can get partial cancellation or a discharge of their loan based on their military service in they served for a full year in a hostile fire or imminent danger pay area.

So if you qualify for loan cancellation, Sorensen suggests supplying a copy of your DD214 (discharge form) and a letter requesting a discharge to your loan servicer.

About ACCPros

The Association of Credit Counseling Professionals, ACCPros, is the credit counseling industry’s newest and fastest growing trade association. ACCPros hopes to distinguish itself from other associations by placing an emphasis on ethics and compliance and focusing on best practices, quality service, education, training, and professional ethics. ACCPros member agencies can be a great resource for consumers seeking help managing their debt. Call the toll-free ACCPros Locator Line at 800-635-0553 to speak with a certified credit counselor at an agency licensed/registered in your state.


DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email is located at 1330 SE 4th Ave, Suite F, Fort Lauderdale, FL 33316.