Advance Fee Loan Scam Suga

Beware of those debt settlement scams. | OregonLive.com

The mailing screamed "1040-1120S" in bold type across the top and "Personal and Confidential" below.

A tax audit? Nope. It's a solicitation from Armored Debt Center, a California debt-settlement firm. Inside, an offer to erase a consumer's $24,307 credit-card debt in 23 months.

Such aggressive marketing is as common today as the plastic in our wallets. Like scalpers outside a Trail Blazers game, lawyers and former mortgage and real estate brokers are setting up debt settlement and loan-modification firms, pledging to "help" consumers drowning in debt or fending off foreclosure.

But this growing for-profit industry is the source of increasing regulatory and consumer ire. The Federal Trade Commission says complaints about such operators more than quadrupled between 2006 and 2007, to nearly 3,300 nationwide. The Oregon Department of Justice received only 15 contacts from consumers about such businesses in 2006 but got 185 last year and has received 93 so far this year.

The industry also remains unregulated in Oregon, giving consumers little recourse when things go wrong.

"We can't really do anything about them," says Lisa Morawski, spokeswoman for the Oregon Division of Finance and Corporate Securities . "That's what we're trying to fix."

It's too bad. Many people are desperate for help and, as is often the case, when desperation rears its head, so do profit-trollers.

You don't need to wait for Oregon lawmakers to act. As I pointed out last month, you can do most of this work yourself. You can also get help from trained counselors -- for free.

But, if you want to pay for it, don't expect a magic bullet. There are a variety of options out there, most of them sugar-coated in marketing-speak. Here's a guide to help you navigate the minefield.

Credit counseling agencies and debt-consolidators: Generally, these agencies put debtors on a plan to pay off bills over time. They'll also tutor consumers on ways to improve their finances.

Lenders often refer troubled borrowers to such agencies. The state regulates 55 debt-consolidation agencies registered in Oregon, of which 47 are nonprofit.

Advocates say the nonprofits are legit and helpful, especially since federal regulators cracked down on a host of sham ones several years ago, says Travis Plunkett of the Consumer Federation of America. "At the very least, you can be assured that the nonprofit you see is a real one and won't charge you through the nose," he said.