Beware of debt relief and debt settlement offers that sound too good to be true
Their promises may sound appealing. But do you know how risky they can be?
Know the risks
Many third-party debt relief and debt settlement companies tell you to start paying them and stop paying your lender while they negotiate on your behalf. This can take months and could result in your loan defaulting, which means the full balance will become due immediately. In addition:
- While you’re not paying your loan, fees and interest may pile up.
- Your account will be sent to collections.
- Your lender might sue you, which could result in a legal judgment and additional collection efforts against you.
- If you have a cosigner, they’re responsible for the loan, too. That means they may also be impacted.
You may end up paying more in the end.
- Many of these companies charge fees of up to 25% of your total debt, and often, these fees aren’t used to help pay down your loan.
Your credit may be damaged, and so might your cosigner’s. Delinquency and default hurt your credit score.
- The worst part? Negative marks can stay on your credit report for up to 7 years.
- This may make it more difficult to get another loan.
- Some insurers, landlords, utility companies, and employers also make decisions based on your credit report.
No guarantees
- Lenders are not required to work with debt relief companies, which means no promises.
- In the end, you may find yourself deeper in debt with damaged credit for following their advice.
There’s a better way!
You’re always better off talking to your lender first. They may be able to work with you, and they won’t charge fees to do so.
Have a Sallie Mae loan and need help? Reach out to us
Sallie Mae has a variety of payment assistance programs available depending on your circumstances. We can help explore ways to support you and protect your credit. No surprise fees, no hidden agendas.
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