Call it what you like, but I haven’t seen the companies that offer debt settlement services ever properly manage, settle, or negotiate all of someone’s debts. And Florida’s Attorney General, present and past, have chased these companies. See this press release for an example.

We have all seen the commercials… promises of settlement because of the new credit card laws, if you have over $10,000 in debt, we can settle your debts for pennies on the dollar, etc.

Here is what these companies don’t tell you:

  • It is rarely successful in settling, negotiating, or managing ALL of your debts.
  • They rarely have “special deals” with certain creditors to get good settlement offers.
  • They usually settle a few small bills in the beginning, but are largely unsuccessful in settling the large bills.
  • You can usually settle the same bills yourself for about the same discount rate that they are able to “negotiate”.
  • Your balances obviously grow while you are not paying the creditors.
  • Your credit score may likely drop while you are not paying the creditors.

And here is the most important one:

  • THEY ALMOST ALWAYS TAKE TOO MUCH IN FEES!

Shocked? I am not. I have seen outrageous sums paid to debt settlement companies with no clear results. I have consulted with people like you who have paid $5,000, $10,000, or even more, in fees alone, to companies handling the debt management. Usually, these companies try to get all their fees first before even starting to settle any of the debts.

This is a violation of Florida Statutes. Debt settlement companies are only allowed to charge certain amounts as prescribed by Florida laws.

Sometimes the companies will issue a refund, but most of the time they don’t.

I may be able to help. I have successfully had fees returned that were in excess of the amount the company was allowed to collect. Most people who have used these services give up too easily in trying to get a refund.

If you are thinking about debt settlement, consider chapter 13. It usually ends with a better result which you can see in a prior blog post.

These companies make millions of dollars each year. There are hundreds, if not thousands, of these companies offering their services. But what are they offering? I think they offer a get rich quick scheme – for themselves.

In almost every situation I have seen, this is what happens:

  1. Client signs up with a debt settlement company to take care of about $20,000 in credit card debts.
  2. Client is supposed to send in $15,000 to the company in the form of about 30 monthly payments of $500.
  3. In the beginning, about $275 of the monthly payment is going towards the company’s fees (if not all $500).
  4. After about 6 months, the debt settlement company negotiates a few small credit card or medical bill for about 50% – maybe $500 each.
  5. The company is ignoring the large credit cards you have because there is not enough money to settle.
  6. Since you stopped paying on all the debt, the large credit card companies go about 3-6 months with no payment and file suit.
  7. When you tell your company about the lawsuit, they say: Sorry! Can’t help you with a lawsuit, maybe you should go talk to a bankruptcy attorney.  Thanks for your business.

Did you notice in the beginning that you had to pay in about $15,000 to settle $20,000 in debt? Using those numbers as an example, that isn’t such a great deal is it? And if you had $15,000 in the bank right now, you most likely could settle them all yourself. Again, you would have paid 25% of your debt in fees to settle!

Before you start paying a monthly fee to a debt settlement company, please do your research. Anyone can put testimonials on a website, but do you know if they are truthful? Anyone can buy a Better Business Bureau membership, but what is their rating? Did you look it up? Are there any complaints on the internet about the company? Whenever I look for complaints on the internet for one of these companies, the complaints sometimes rank higher on google than the company’s own website!

If you feel you have already been victimized by one of these companies, please call 407-749-0080 now for a free consultation to see how I may be able to help you. It may not be too late to seek a refund of fees that were paid.

Image provided by SqueakyMarmot.