Posts Categorized: Debt Settlement Companies

News Flash! Just Because You Heard It In An Advertisement Doesn’t Mean It Is True

I’m not sure what this says about me, but I listen to a fair amount of talk radio and watch a bit of late night television. There isn’t a day that goes by where I don’t encounter an advertisement demanding my attention if I, “have more than $10,000 in credit card debt.” It goes on to tell me that, because the government bailed out banks and car companies, I am entitled to have my debt reduced by 50% or more.

You only have to make a small leap of logic for this to make sense. Things are tough. The government bailed out some industries, why couldn’t it help citizens struggling with debt? It might seem reasonable, but it frankly is not true.

The companies running these ads all try to create the appearance that they either are a part of the government or are sanctioned by the government. That isn’t accurate at all. They are for-profit debt settlement companies. They can’t help you take advantage of a mythical government program, but they may take advantage of you.

In our experience, the for-profit debt settlement industry is deeply flawed. There are some “companies” that are flat-out scams. They get you to pay their fees up front and then stop answering your calls when it is time for them to settle with your creditors. There are some legitimate businesses in this realm, but we’ve seen their methods fail time and again. Essentially, for these programs to work, your creditors have to never sue you and then be willing to accept a fraction of what you owe in satisfaction of your debts. This sounds great in theory, but rarely works out in practice.

If you’re finding yourself tempted by these ads, we recommend calling a reputable non-profit organization like Lutheran Social Services. Their program isn’t for everyone, but it is legitimate. Or you can always call us. We provide free consultations and will shoot you straight.

The For-Profit Debt Settlement Industry

You’ve been hounded by collection calls at home, work and on your cell phone. Every trip to the mailbox yields another stack of Second Notice letters and “action required” notes with law firm return addresses. The stress has led to fights with your spouse which has, in turn, led to another night on the couch. You try to escape into a marathon of Dog The Bounty Hunter. Between fugitives and indecipherable dialogue you see the same commercials you’ve seen a hundred times: SETTLE YOUR DEBT FOR PENNIES ON THE DOLLAR. ELIMINATE CREDIT CARD DEBT TODAY. TURN YOUR DEBT INTO WEALTH. NO OBLIGATION.

You’ve never purchased anything off television. You know the Sham-Wow can’t possibly be as good as advertised. Why would this be any different? The short answer is that you’re out of good options. You’re scared about losing your car, your home or even going to jail.

You call. The person who answers the phone gives the impression he’s in an office somewhere. It’s possible he is, but it is more likely that he is fielding late-night calls in his boxer shorts from an apartment. He may tell you he’s the manager or the CEO and he may very well be. What he likely won’t tell you is that he is twenty years old and has no experience in settling debts.

He tells you anything he thinks might make you send a check: “We have an army of lawyers working to settle your debts,” “We offer a full money-back guarantee,” “We are insured by the federal government.”

You agree. Great. As soon as you get started, you’ll be sixty monthly payments from financial freedom. The company will send you a package with a contract, information to set up an account with a bank of its choosing and a sheet asking you to identify your debts. It may or may not include the information that the company’s fees eat up the majority of the money you send in for the foreseeable future. It may state that your credit score will suffer. It likely will not tell you that you’ll be sued by your creditors long before you come near paying them off. It definitely won’t tell you that the company is likely to change its name multiple times per year or that there is a strong chance your attempts to call the company will meet disconnected phone numbers.

The ugly truth is that the for-profit debt settlement industry is a scam. If these companies were honest and transparent with their clients, we could give them the benefit of the doubt and call it a flawed business model. Unfortunately, it is not. It preys on consumers who feel they have nowhere else to turn and leaves them worse off than when they called. So what other options do you have? Stay tuned…

Welcome to the Friedman Iverson, PLLC Consumer Blog!

The world needs another blog like I need an additional hole in my head.  So why are we doing this? We get calls everyday from people who are frustrated and frightened by situations they’re facing. They aren’t necessarily looking to hire a lawyer, but they need some information to determine their rights and assess their options.  We’re always happy to take these calls, but we thought posting answers to the most common questions would be convenient for consumers.

We want this blog to grow organically. We will definitely comment on developments in the law and relevant news stories. We will probably also trumpet our successes (blogs are nothing if not a bit self-indulgent), but a lot of how we’ll develop depends on our readership. If there is a topic that you would like us to address, shoot us an email at: info@nullfriedmaniverson.com.

In the coming weeks and months look for posts on bankruptcy, debt collector harassment, auto fraud and foreclosure.  Please check back early and often and offer your comments.  Let’s make this fun.

Debt settlement companies: consumers beware

30556169_906ac1bfdeThey go by many different names: debt settlement companies, credit counseling agencies, debt negotiators, etc. Many consumers turn to them when their bills started piling up. They pay the company several thousand dollars as an up-front fee. The company promises to get them out of debt through a “secret program” that the credit card company doesn’t want them to know about.

But what the debt settlement companies don’t tell consumers is that there really are no secret programs to get out of debt. I know this because I used to collect debts for some of the largest credit card companies in the world. And even though the credit counseling agency promises to settle your debt for pennies on the dollar, remember that it takes two parties to settle a debt, the consumer and the creditor. And creditors rarely settle debts for pennies on the dollar. So now the consumer is in the same position as they were before hiring the debt settlement company, only their wallet is noticeably lighter.

Consumers would be wise to avoid for-profit debt settlement companies. Many are outright scams that will pocket your money and then disappear.  And even the legitimate ones can’t do anything that you can’t do yourself for free. But if the thought of negotiating with your creditors makes you nervous, there are many non-profit programs that do fabulous work for no fee.

(photo: cowicide)