It’s a jungle out there, especially for cash-strapped consumers. There are scam artists just waiting to prey on those who are in debt and in need of cash or a seemingly easy opportunity to pay off their credit card debt.

Here are some of the ways the scammers operate:

• Scammers set up fake loan companies that guarantee anyone can obtain a loan, but there’s a catch. Never pay a fee before the loan is approved. Fees sometimes go by other names: they can be labeled as taxes, insurance, processing fees or collateral. The fees can be hundreds or thousands of dollars. These scammers are breaking the law. Federal and state laws prohibit upfront fees for loans.
• Another scam is to guarantee providing a loan before the person has even applied. No legitimate lender would make this offer. 
• In yet another scam, a company claims it can arrange to pay off credit card debt for a lot less than what is owed through their debt-negotiation program. They ask a person to make payments to them, which they’ll hold in a special account to pay off creditors. In truth, there’s no guarantee that the creditor will accept a partial payment. In fact, if monthly credit card payments are missed, late fees and interest usually will accrue. It could lead to doubling the debt, negatively impact credit and lead to a lawsuit from the creditor.
• In yet another scam, credit repair companies say they can erase bad credit and even create a new credit identity – for a fee. To play it safe, don’t pay any company upfront for credit repair. Under the Credit Repair Organization Act, companies must wait until they have performed the services before they require payment.

In short, there’s no quick fix to repairing credit. It takes time and requires repayment of debt. In truth, anything a credit repair company offers to do is something an individual can do for him or herself.

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.