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Healing Your Debt Settlement Sickness

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Say you sought the help of a doctor to cure some ill in your life. However, instead of helping you heal, your physician actually makes you sicker. Realizing this, you would likely not only move on to a different doctor, but also report the offending physician—a professional, like many others, whose misconduct could mean malpractice, serious sanctions and a loss of licensure.

Unfortunately, this same kind of accountability hasn’t been as much a part of the debt settlement industry. In recent years, the lengthy recession has delivered to them an abundance of debt-saturated “patients,” suffering from the ills of unemployment and sliding toward the brink of bankruptcy; and until recently no one had really monitored the industry’s activities.

This lack of regulation is shocking considering that settlement companies typically harvest fees reaching 15 to 20 percent of the credit card balances carried by their customers, and they tend to collect upfront, regardless of whether a customer’s debt is actually reduced. State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are fleeced of their last dollars in an effort to avoid bankruptcy. But these same people rarely emerge from debt settlement programs with their credit card balances eliminated and many end up worse off, with severely damaged credit, unending threats from bill collectors and lawsuits from creditors.

Even this week, Illinois Attorney General Lisa Madigan announced the Illinois Debt Settlement Consumer Protection Act, arming Illinois consumers with the strongest protection in the nation against the abuses and unfair treatment from these companies. Madigan said she was prompted by “the drastic increase my office has seen recently in complaints against dishonest debt settlement operators. Since 2009, my office has filed seven lawsuits against firms using abusive and deceptive means to take money from Illinois consumers whom they promised to help through their financial woes.”

Like people in Illinois, customers all over the country have bought into bankruptcy alternatives like debt settlement—and by doing so, face the real possibility that before they know it, they’re paying the company thousands of dollars of non-refundable fees up front. And while customers are told to stop paying their credit cards as the firms negotiate a settlement, often the settlement never actually happens. As a result, Madigan says, “About two-thirds of consumers drop out of these programs before their debts are settled. They not only lose the thousands of dollars in non-refundable fees, they are often deeper in debt than when they started thanks to penalties and late fees imposed by the credit card companies due to the lack of payments.”

In short, debt settlement firms are bad medicine: financial quacks trying to sell their customers a quick and easy cure for the economic ills of our Great Recession. Unfortunately, not all states have enacted protections against these charlatans, leaving many open to the tricks of the debt settlement trade.

So, if you are considering bankruptcy alternatives due to mounting credit card debt balances, it’s advised that you instead address your debt with a knowledgeable attorney and a proven solution to insolvency: bankruptcy. Knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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