When you’re feeling overwhelmed by debt, those phone calls and emails promising quick relief can seem like answered prayers. But here’s what you need to know: debt scammers are counting on your desperation to make their pitch work. They’ve been especially busy lately, and the Federal Trade Commission has been cracking down hard in 2025, shutting down multiple operations that have stolen millions from people just like you.

The reality is that legitimate debt relief takes time and effort. There’s no magic wand that makes debt disappear overnight. Understanding the warning signs of debt scams can save you from falling deeper into financial trouble when you’re already struggling.

The Most Common Red Flags That Signal a Scam

They Demand Money Upfront

This is the biggest warning sign of all. Federal rules prohibit for-profit companies that sell debt relief services over the telephone from charging a fee before they actually settle or reduce a consumer’s debt. If someone asks you to pay hundreds or thousands of dollars before they’ve helped you with even one debt, hang up the phone. Legitimate debt settlement companies only get paid after they’ve successfully negotiated with your creditors.

Think about it this way: if they were confident in their ability to help you, wouldn’t they be willing to prove it first?

They Promise Unrealistic Results

Be wary of companies that guarantee they can eliminate 75% or more of your debt, or promise to make your debt disappear completely. The FTC recently shut down an operation that falsely claimed to reduce consumers’ debt by as much as 75% or more, targeting seniors and veterans with these too-good-to-be-true promises.

Real debt settlement typically results in paying 40-60% of what you owe, and that’s only after months of setting aside money and potentially damaging your credit score. Any company offering better results than this should raise immediate suspicions.

They Contact You Out of the Blue

Legitimate debt relief companies don’t usually cold-call people or send unsolicited emails. If you get a robocall or high-pressure sales pitch from someone you didn’t contact first, that’s a major red flag. Recent FTC actions have targeted operations that contacted consumers through telemarketing calls and used aggressive tactics to pressure people into quick decisions.

They Tell You to Stop Paying Your Bills

Some scammers will tell you to stop making payments to your creditors and send that money to them instead. This is terrible advice that will tank your credit score and potentially lead to lawsuits from your creditors.

How Scammers Are Getting More Sophisticated

Debt scammers have become increasingly clever in recent years. They’re now falsely impersonating consumers’ banks, credit card companies, and even government agencies to make their pitches seem more legitimate. Some have even pretended to be affiliated with the Department of Education to target student loan borrowers.

These impersonation tactics are particularly dangerous because they can make the scammer seem trustworthy at first glance. Impersonation scams resulted in $2.95 billion in consumer losses in 2024, showing just how effective these tactics can be.

How to Protect Yourself

Ask the Right Questions

When someone contacts you about debt relief, ask for specific details: their full name, company name, physical address, and a direct phone number where you can reach them. Legitimate companies will provide this information without hesitation. If they refuse or give you vague answers, that’s your cue to end the conversation.

Do Your Research

Before working with any debt relief company, check their credentials. Look them up with the Better Business Bureau and your state’s attorney general’s office. Search for reviews and complaints online. A legitimate company should have a track record you can verify.

Get Everything in Writing

Never agree to anything over the phone. Legitimate companies will send you detailed written information about their services, fees, and what they can realistically accomplish. If they pressure you to sign up immediately or claim the offer is only good for today, walk away.

Consider Free Alternatives First

Before paying anyone for debt help, explore your free options. Contact your creditors directly to discuss payment plans. Many will work with you if you explain your situation honestly. You can also get free credit counseling from nonprofit credit counseling agencies that are accredited by the National Foundation for Credit Counseling.

What to Do If You’ve Been Scammed

If you think you’ve fallen victim to a debt relief scam, don’t be embarrassed. It happens to smart, careful people every day. Take action immediately by contacting your bank to stop any automatic payments you’ve authorized. Then file complaints with the FTC at ReportFraud.ftc.gov and your state attorney general’s office.

The sooner you report the scam, the better chance authorities have of stopping the scammers and potentially recovering some of your money. The FTC has been sending millions in refunds to consumers harmed by debt relief schemes, so reporting can make a real difference.

Remember, dealing with debt is stressful enough without having to worry about scammers making your situation worse. Trust your instincts, ask plenty of questions, and don’t let anyone pressure you into quick decisions with your hard-earned money. There are legitimate ways to get help with debt, but they require patience and careful research, not desperation and hope for miracle solutions.