It is common for our clients to be scammed by these companies. There is some promise to settle debts for pennies on the dollar. Creditors, however, do not have to settle with you at all; there is nothing special about the relationships between debt settlement companies and credit cards/debt collectors that guarantee settlements. Most of the time, the debt settlement companies will keep most of the money for themselves, leaving little for the actual settlement. They can’t do anything for you that you can’t already do for yourself – not pay your creditors then work out a settlement.

If you do decide to hire a debt settlement company, please be sure to check with the FTC and Attorney General office of the state the company is located. There are lots of warnings issued by governmental agencies regarding the dangers of hiring a debt settlement companies. We also see the United States Trustee that oversees bankruptcy sometimes go after debt settlement companies for scamming consumers.

Posted in: Bankruptcy Myths Faq