Does debt settlement work? Shouldn’t I try that before looking at filing bankruptcy?

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24th Oct 2012

Does debt settlement work? Shouldn’t I try that before looking at filing bankruptcy?

According to a NACBA Consumer Alert (‘The Debt Settlement Trap: The #1 Treat Facing Deeply Indebted Americans’ October 2012):

“Even the industry acknowledges – though not in its ever-present radio and online advertising–that debt settlement schemes fail to work for about two thirds of clients. Federal and state officials put the debt-settlement success rate even lower – at about one in 10 cases – meaning that the vast majority of unwary and uninformed consumers end up with more red ink, not the promised debt-free outcome.”

http://ow.ly/eDkr3

Here are some red flags to watch out for with debt settlement companies:

  • Promises that unsecured debts can be paid off for pennies on the dollar.
  • They require substantial monthly service fees and demand payment of a percentage of what they’ve supposedly saved you.
  • They tell you to stop making payments or to stop communicating with your creditors
  • They suggest that there is only a small likelihood that you will be sued by creditors.
  • They state that they can remove accurate negative information from your credit report.

In short, you need to consult an attorney before signing up for a debt settlement program.

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