The Dangers of Debt Settlement Firms

Imagine it: Oceanfront resorts. Leis around necks. Succulent buffets. Steel drum music in the distance. Beautiful hostesses serving plentiful drinks. Tanned clientele all around.

For many beleaguered Americans these images evoke a distant and faraway vacation-land entitled for only the endlessly rich and privileged few. But this background of tropical bliss isn’t only for elite individuals. They’re the type of settings now home to industry trade associations like the United States Organizations for Bankruptcy Alternatives, a group that recently convened in Palm Beach, Florida, amid the oceanfront confines of the Four Seasons Resort, to forge deals and plot strategy. And for these types of companies that are currently promising relief to Americans confronting overwhelming credit card debt, business is booming.

In fact, according to a recent New York Times article, for the debt settlement industry, happy days are here again. As Peter S. Goodman reported, “The long recession has delivered an abundance of customers—debt-saturated Americans, suffering lost jobs and income, sliding toward bankruptcy. The 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 being fleeced of their last dollars with dubious promises. Consumers rarely emerge from debt settlement programs with their credit card balances eliminated, these critics say, and many wind up worse off, with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors.”

In short, if you buy into bankruptcy alternatives like debt settlement, the possibility is real that before you know it, the three, four, five, maybe even a dozen different credit cards you are trying to pay and protect are now simply a revenue builder for a burgeoning industry duping you out of much-needed money. You send them money up front, they take their cut off the top, and, unlike bankruptcy, they leave you with little to no protection from the credit card companies coming after you for more on their end.

And keep in mind, the debt settlement pitch on television and radio is, in most cases, just that, making lofty promises to spare people from bankruptcy and eliminate her debts. As the industry grows, so do its aggressive strategies and unfair practices. As the Times reports, “Since 2004, at least 21 states have brought at least 128 enforcement actions against debt relief companies, according to the National Association of Attorneys General. Consumer complaints received by states more than doubled between 2007 and 2009, according to comments filed with the Federal Trade Commission. ‘The industry’s not legitimate,’ said Norman Googel, assistant attorney general in West Virginia, which has prosecuted debt settlement companies. ‘They’re targeting a group of people who are already drowning in debt. We’re talking about middle-class and lower middle-class people who had incomes, but they were using credit cards to survive.’”

So, if you are considering a bankruptcy due to mounting credit card debt balances, it’s advised that you instead address this fact with a knowledgeable attorney. 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 +1-833-627-0115, 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.