As debt problems are on the rise, complaints about debt settlement companies are on the rise as well. But is debt settlement a wise alternative to bankruptcy?
The Better Business Bureau has said it receives numerous complaints on debt settlement companies. In fact, choosing a debt settlement company unwisely can land a client in worse shape than before.
The Government Accountability Office recently found that 17 of the 20 companies it investigated imposed fees before settling debts. The Federal Trade Commission has proposed banning that practice.
It has been my experience that debt settlement companies usually tell consumers to stop paying their creditors directly and instead pay into an account held by the company and from which it receives a fee.
The debt settlement company collects money in the account and then tries to persuade the creditor to settle for the amount of the account.
Some creditors settle and some don't, and often the consumer is back where he or she started, except further behind.
This process leaves consumers behind on their accounts and can lead to lawsuits, wage garnishments, and loss of property. In fact, only 1 in 10 people complete the process.
Bankruptcy differs from debt settlement company programs because it has the law behind it to force creditors to accept the debtor's new payment plan. Only bankruptcy can legally stop creditor harassment and wage garnishment.
If you are considering getting out of debt, don't hesitate to contact us online or call (901) 327-2100 and discuss your options. Our experienced bankruptcy attorneys would be glad to answer
your questions and help you get started, free of charge.
