Hiring Debt-Relief Company To Negotiate With Credit Cards

Many prospective bankruptcy clients ask me during their initial consultation whether they should use a company to help them negotiate settlements with credit card companies prior to pursuing Chapter 7 bankruptcy. My experience is that credit negotiation companies can help people with a small number of credit cards, but they usually are unable to successfully settle with several different creditors. The bigger problem is that a significant percentage of credit negotiation companies are scams; they charge already overwhelmed consumers up-front fees and then do very little to solve the consumers debt problems. The Wall Street Journal on October 14 had an article on "debt relief firms. " The article conveys the story of a Florida consumer who hired a debt-relief company which never settled any of his debts. The consumer eventually had to file bankruptcy and says that "I wish I had done that to begin with." If you are considering hiring a company to settle your credit card debts, you should first read the Wall Street Journal Article.

The web address of the Article is : http://sec.online.wsj.com/article/SB122394458494631223.html

Comments

[Kevin @ Bankruptcy Alternatives]

Hello All,

I request all of you to report all debt settlement companies that do ot live up to their promises to Debt Settlement Scams. We are making a database of companies that rip off people, so that others can be benefited by it. This is more like a social cause, please contribute to the same.

[Debt Free]

One of the most important drawbacks of debt settlement program is that calls from creditors and collection companies will persist while the client is in the debt settlement program.

[Jeffrey]

What a great blog, interesting topics! I love reading this material.

[Dmitri Arse]

I agree that the lack of regulation in the debt settlement industry does create a market with firms whose ethics range the gamut. However, there has to be some merit in the practice. I found examples of the following debt settlement letters on this Texas based firm's site. The verbiage alone in these letters appear to be valid.