Beware of "Government" and Other Too-Good-to-Be-True Debt Relief Offers

Warning Signs of Scams  and How to Find Help You Can Trust

When you’re overwhelmed by debt, relief can’t come fast enough. And that’s exactly what scammers count on. You’ve probably seen the ads on social media:

• "Government backed program to help Americans get out of debt fast!"
• “Settle for pennies on the dollar!”
• “The secret the credit card companies don’t want you to know!”
• “Guaranteed results fast!”

If it sounds too good to be true, it probably is. We have spoken with far too many people who paid thousands of dollars to companies that promised quick fixes and delivered nothing but more damage. Lost money. Worse credit. More stress.  We’re here to help you recognize the red flags, understand what legitimate debt help actually looks like, and how to protect yourself from financial predators.

Key Takeaways

• Debt relief scams target people who are feeling stressed, behind, or desperate.
• The United States government is not advertising debt relief programs on Facebook, Instagram or TikTok.
• It is illegal for debt settlement companies to charge upfront fees before successfully settling a debt for you.
• No company can legally “erase” accurate negative information from your credit report.
• Real debt help is transparent and never rushed.
• Nonprofit, licensed credit counseling organizations that offer Debt Management Plans (DMPs) are regulated and safe options.
• If you suspect the company you’re talking to is a scam or dangerous to your financial future, stop communication immediately.

Why Debt Relief Scams Exist

Debt is emotional. When the bills are piling up, and the phone won’t stop ringing, you’re not just looking for a financial strategy; you’re looking for relief. Scammers prey on urgency and fear. Many fraudulent companies:

• Target consumers through social media ads and search engines
• Use robocalls or spam texts
• Make bold guarantees that cannot legally be promised
• Pose as government programs

Their goal is simple: collect fees and personal information before disappearing (or before the damage becomes obvious).

The Most Common Types of Debt Relief Scams

Advance-Fee Debt Settlement

These companies promise to negotiate with your creditors, but first, they require a large upfront fee. Then they often tell you to stop paying your bills while they “work on a settlement.” What happens next?

• Late fees pile up
• Collection calls increase
• Your credit score drops
• Lawsuits become a risk
• In many cases, no settlement happens

Red flag: Charging upfront fees for debt settlement is illegal.

“Guaranteed” Credit Repair

Many so-called credit repair companies advertise fast credit score increases, “clean credit reports,” or starting your credit history from scratch. In reality, legitimate credit repair is limited to disputing inaccurate information, not erasing real debt or negative history. Some companies claim they can:

• Remove bankruptcies
• Delete collections
• Boost your credit score overnight

The reality: no one can remove accurate negative information from your credit report. And you can dispute reporting errors yourself for free by visiting the three bureaus: TransUnion, Experian, and Equifax.  Red flag: Anyone guaranteeing credit score improvements is misleading you.

Fake Government Programs

If an ad claims to be a “federal debt forgiveness program” or a “government-approved consolidation service,” assume it is not legitimate unless you can independently verify it through an official government website. These phrases are frequently used in scams to manufacture credibility. Scammers often use official-sounding names and logos. They may claim to be:

• A new federal forgiveness program
• A government-endorsed consolidation service
• A new program just for veterens

Real government agencies do not cold-call you to offer debt settlement. And legitimate nonprofits are transparent about their status and licensing. Red flag: Government agencies do not charge fees to “enroll” you in secret debt programs.

Identity Theft Disguised as Debt Help

Some scams aren’t really about debt relief at all; they’re about stealing your identity. These operations pose as helpful financial services, but their real goal is to collect your personal information and use it for fraud. These companies will often call you with an “offer” of debt relief and then ask for your personal details. Some fake services ask for:

• Social Security numbers
• Bank account information
• Credit card details

Then they disappear, or use your data fraudulently. Warning: NEVER provide sensitive information to someone who contacted you unexpectedly or cannot be verified.

Warning Signs: How to Spot a Scam

Most debt relief scams reveal themselves through a handful of common red flags:

• They require you to pay their large fees upfront before they will settle your debt
• They guarantee to erase debt or credit damage
• They pressure you to “act now!” or tell you, “This offer is only good for 2 days!”
• They tell you to stop communicating with creditors
• They refuse to provide a written agreement
• They have no verifiable physical address
• They claim to be from the government

If even one of these feels off, halt all communications with them and DO NOT provide them with any additional information or payments.

What Legitimate Debt Help Looks Like

There are safe, regulated ways to get out of debt.  Real debt repayment options don’t rely on guarantees or pressure. They follow clear legal guidelines and prioritize transparency and responsible repayment. Here’s what trustworthy help includes:

Nonprofit Credit Counseling

A legitimate credit counseling agency takes a full-picture approach to your finances. Instead of offering a quick fix, certified counselors review your income, expenses, and debts to help you understand your options and build a realistic plan.  A reputable nonprofit agency will:

• Review your entire financial picture
• Help you create a workable monthly budget
• Explain all available options
• Provide education, not pressure

Certified counselors are trained to guide, not sell.

Debt Management Plans (DMPs)

A Debt Management Plan (DMP) is a structured repayment program set up through a credit counseling agency. Instead of juggling multiple high-interest payments, you make one monthly payment while the agency works to reduce interest rates and fees.  If appropriate, a Debt Management Plan may:

• Combine multiple credit card payments into one
• Reduce interest rates
• Stop late fees and collection calls
• Help you repay debt in 3–5 years

You repay your debts in full, but under more manageable terms. No gimmicks, just a straightforward plan to become debt-free. Debt settlement can be appropriate in certain financial situations, particularly when repayment in full is no longer realistic. However, it should be used thoughtfully and strategically with a clear understanding of the credit, tax, and legal implications. When done responsibly and as part of a comprehensive plan, it can be one tool among many; not a one-size-fits-all solution. Our DualTrack Plan offers debt management and debt settlement in a hybrid plan, so each one of your accounts gets handled in the way that’s best for you and your goals.

Transparency and Time

Trustworthy organizations don’t rush you into enrollment. They explain the pros and cons of each option, disclose all fees upfront, and encourage you to take the time you need to feel confident. Legitimate providers:

• Disclose fees clearly and in writing
• Provide full contracts (like a Docusign or printed document) before enrollment
• Answer your questions thoroughly
• Give you time to decide

If you feel rushed at all, walk away. The right organization will want you to feel ready and confident before joining a debt management program.

Scam vs. Legitimate Debt Help: What’s the Difference?

At first glance, a scam company and a legitimate debt help provider can sound surprisingly similar. Both may use phrases like “lower payments,” “relief,” or “negotiation.” The difference is in how they operate.‍

Upfront Fees

Scam companies often demand large fees before doing any work. In many cases, these advance fees are illegal. Legitimate providers clearly disclose their fees in writing and only charge in accordance with federal and state regulations. A small fee that is clearly disclosed ahead of time is normal for debt management programs. Charging hundreds or thousands as “fees” upfront is sign that you need to stay away.

‍Guaranteed Results

A scam may promise to “erase your debt” or “boost your credit score fast.” No ethical company can guarantee those outcomes. A legitimate organization explains what is realistically possible under the law and makes no promises it can’t keep.

‍Transparency and Contracts

Fraudulent companies often avoid clear written agreements or bury important details in fine print. Legitimate agencies provide full written disclosures, explain terms clearly, and give you time to review before signing anything.

‍Certification and Licensing

Scam companies are often vague about licensing, nonprofit status, or counselor certifications. Trustworthy organizations are licensed where required, transparent about their nonprofit status (if applicable), and staffed by certified professionals. At Family Credit Management, our counselors are certified by the NFCC and we’re licensed to provide credit counseling and debt management across the United States.

Ongoing Support

Many scams are purely transactional. They collect fees and move on. Real debt help includes guidance and ongoing support, and offers services like education and budget counseling designed to help you modify behavior so you never find yourself in the same spot again. In short, scam companies sell shortcuts. Legitimate organizations offer accountability and transparency.

What To Do If You Suspect You're Dealing with a Scam

1. Stop communicating immediately.
2. Do not send money or additional information.
3. Report the company to the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), or your state attorney general
4. Check your credit report for suspicious activity.
5. Consider placing a credit freeze if identity theft is a concern

Questions to Ask Before Choosing a Debt Help Provider

If a company can’t clearly explain who they are, how they’re paid, and what they’ll actually do for you, that’s a problem. Use these questions to evaluate whether you’re dealing with a trustworthy organization or a risky operation.

• Are you a licensed nonprofit credit counseling agency?
• What services do you offer, and what are the costs?
• Are your counselors certified?
• Will I receive a written agreement?
• How soon after receiving my payment will you pay my creditors? (Unless you’ve agreed in writing to a lump sum settlement, the answer to this question should be less than a week. If they are holding your money without your consent, that’s a huge problem.
• How often will I receive statements/will I have online access to ensure my account activity on your program matches what my creditors are reporting?

If they can’t answer your questions clearly or are evasive, it’s time to find a different organization to help you.

Why Choose Family Credit Management?

When you’re looking for debt help, you’re not just choosing a program; you’re choosing who to trust with one of the most stressful parts of your life.

Family Credit Management is a national nonprofit credit counseling agency that has been helping individuals and families regain control of their finances for more than 30 years. We’re not here to sell you a shortcut that turns out to be more trouble than it’s worth. We’re here to give you a clear, realistic path forward.

‍You talk to a real person

You will never be stuck talking to a chatbot or an automated system. We do not use AI or bots to handle your questions. Every call, text or email is answered by a real person who understands and cares about you.

No Scripts, No Pressue

We don't use scripts or high-pressure sales tactics. When you reach out, you connect with a certified credit counselor who takes the time to understand your full financial picture, not just your balances. And in most cases, you work with the same counselor from start to finish.

‍Your plan is built around you

There’s no one-size-fits-all solution to debt. We look at your objectives, stress level, and long-term priorities before recommending anything. If a Debt Management Plan makes sense, we’ll explain how it works. If it doesn’t, we’ll tell you that too.

‍We’ve done this before... a lot

Over the decades, we’ve worked with over a million people and tens of thousands of creditors nationwide. We understand how to negotiate responsibly, reduce interest rates when possible, and create repayment plans that actually work.

‍We’re held to high standards

As a licensed nonprofit organization, we operate under strict regulatory and quality guidelines. We’re transparent about our fees, we put everything in writing, and we encourage you to ask questions before making any decision. We’re also ISO certified and a member of the National Foundation for Credit Counseling (NFCC).

‍You stay in control. Always.

You’re never pressured to enroll. You’re never rushed into signing paperwork. Our role is to show you the options you have to get out of debt, not to push. This is your life and your finances; this has to be a decision that you make on your terms. At the end of the day, legitimate debt help should feel steady and clear, not rushed, flashy, or confusing. That’s the difference between a scam or less-than-professional company and a trusted nonprofit partner.

Get a free quote here to see your options, customized for you by one of our Certified Credit Counselors.

Bottom Line

There are no magic erasers for debt. Companies that promise to wipe away balances, fix your credit overnight, or enroll you in secret government programs are selling illusions, and those illusions can cost you thousands. Slow down, do your research, and choose a partner that explains your options clearly and gives you time to decide. Your financial future deserves that level of care.  Take your time. Verify credentials. Ask questions. The right help will stand up to scrutiny.

‍

‍

Frequently Asked Questions

‍