Javascript is not enabled.

Javascript must be enabled to use this site. Please enable Javascript in your browser and try again.

Skip to content
Content starts here
Leaving Website

You are now leaving and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Debt Relief Scams

Credit cardsMedical billsStudent loans. When debt seems like a hole you’ll never climb out of, a phone call, email, website or ad promising to settle your liabilities for pennies on the dollar can be awfully tempting. But proceed with care: Some debt relief offers are scams that will dig you in even deeper.

There are reputable companies and organizations that can help you get out of the red. They can advise you on budgeting and money management, negotiate concessions with creditors or set you up with a plan to put away money each month to pay down your debts, usually over a period of years.

spinner image Image Alt Attribute

AARP Membership— $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

Join Now

Scammers, on the other hand, offer sham “guarantees” to get you out of debt quickly and cleanly — and, crucially, “they ask you to pay them before they do anything for you,” says the Federal Trade Commission (FTC). That’s illegal, and a big red flag that your would-be debt savior isn’t on the up-and-up. (Legitimate debt relief firms do charge for their services but can collect only when they get results.)

Some take your money and run; others will string you along, collecting payments and making promises while you fall farther behind on delinquent accounts. The FTC received 20,590 consumer complaints related to credit and debt conseling in 2021, more than in the prior two years combined.

Student loan debt, which has ballooned to $1.6 trillion and is a growing burden for older Americans, is an especially ripe market for fraudsters, who collect advance and ongoing fees with bogus promises to enroll customers in government debt-forgiveness programs. Amid the economic anxiety caused by the coronavirus pandemic, consumers have been targeted by scam robocalls offering student loan replayment help and other debt assistance, the Federal Communications Commission reports.

Even with legit companies, debt settlement carries considerable risk. Many firms instruct clients to stop paying their debts, on the premise that this will compel creditors to negotiate a reduction. It might — but creditors are under no obligation to settle rather than, say, sue, and in the meantime you could accrue interest and penalties and damage your credit score. Some firms don’t fully explain the potential consequences, according to the FTC. The commission encourages consumers to carefully weigh a range of options when looking for ways to dig out of debt.

Warning Signs

  • A debt relief company asks for fees up front, before it settles any debts.
  • The company guarantees it can eliminate your debt or reduce it by a particular amount in a set period of time.
  • The company advises you to cut off communication with creditors.
  • The company won’t send you information about its services unless you provide financial information such as credit card account numbers and balances.
spinner image cartoon of a woman holding a megaphone

Have you seen this scam?

  • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
  • Get Watchdog Alerts for tips on avoiding such scams.

    How to protect yourself from this scam

    • Do your homework on a debt relief service you are considering working with. Search online and check with your state’s attorney general and consumer protection agency to see if the company has been the subject of complaints.
    • Do know the disclosure requirements for debt settlement companies. Among other things, they must explain all fees for and conditions on their services, estimate how long it will take to settle each debt, and lay out the risks of stopping payments to creditors.
    • Do be skeptical of claims that a “new government program” or change in the law will reduce, forgive or cancel student loans, credit card debt or other liabilities.
    • Do consider other options for dealing with debt, such as negotiating directly with creditors or using a nonprofit credit counseling agency.
    • Don’t pay a debt relief or credit counseling service fees in advance, even if they’re couched as “voluntary” contributions.
    • Don’t believe guarantees. No company can ensure that it will reduce your debt by a certain amount or stop collection calls and lawsuits.
    • Don’t let a company enroll you in a debt relief program without reviewing your financial situation with you.
    • Don’t buy that a company can get negative information out of your credit file. If data on delinquency, defaults and other problems is correct, it stays on your credit report for at least seven years, by law.
    See more Health & Wellness offers >

    More Resources

    • Report debt relief scams to the Federal Trade Commission, online or at 800-382-4357.
    • The FTC and the U.S. Consumer Financial Protection Bureau offer background and advice on debt settlement, credit counseling and other ways to get out from under your financial liabilities.


    Discover AARP Members Only Access

    Join AARP to Continue

    Already a Member?

    spinner image cartoon of a woman holding a megaphone

    Have you seen this scam?

    • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
    • Get Watchdog Alerts for tips on avoiding such scams.