Beware of False Promises on Debt

· The firm provides a guarantee for something it can't possibly control. How can it promise a $3,000 debt reduction? If I were Spider-Man, the exactness of that guarantee would have set off all of my spider senses.

· A company that the couple know little about wants them to sign power-of-attorney forms. Cunningham said that often in these types of deals, the customers are told to stop paying their bills and instead send money to the debt-settlement outfit to save up for a lump-sum offer. However, customers are often not informed of the risk of stopping payment and that creditors might still take legal action.

The customers are instructed to have no contact with the creditor, and that the settlement company will take over. That's why they need to get the power of attorney, which allows an individual or company to act on your behalf. "This is a very slippery slope," Cunningham said.

OK, those were the red flags just from my reader's brief e-mail. But I didn't stop at my gut suspicions. I did a general search for the company on the Internet. On http://www.ripoffreport.com, a consumer complaint Web site, I found some disturbing comments from customers of the same Florida-based company. While sites like this are helpful, you do have to consider that many legitimate business dealings leave customers unhappy. Nonetheless, the comments about the company were insightful.

"I should have hung up, but due to my state of mind at the time, I did not," one customer wrote in her posting. The company promised a guaranteed savings of at least $5,000 in interest or her $895 back.

She got neither, she complained -- no savings, no money back.

Additionally, I searched the Better Business Bureau database. I went to http://search.bbb.org and did a "Reliability Report" on this company. The BBB has given the firm a D rating because of the short time it has been operating and the number of consumer complaints. BBB assigns grades from A to F.

I sent all this information to the woman in Rochester. She and her husband are going to take my advice and contact a nonprofit credit counselor at http://www.debtadvice.org.

"I have a feeling there could be others in the same financial boat looking for that golden life preserver," she wrote back.

If one of your New Year's resolutions is to get out of debt, don't let desperation lead you to sign an insanely expensive, or worse, fraudulent debt settlement contract.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and at http://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail: singletarym@washpost.com.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.