Debt Settlement, Does It Work?

Client's come to me on a regular basis, after working with a debt settlement company. Some of them have been in debt settlement programs for many months, up to two years. They have spent thousands of dollars in an effort to "settle" their debts. Much of this money went to the debt settlement company. I have seen debt settlement agreements that charge up to $7,000. The client has spent money, time and effort to settle their debts and encounters numerous problems along the way, only to decide that bankruptcy is the best option.

An alternative to bankruptcy tops every debtor’s wish list. Debt settlement companies pitch: “Don’t file bankruptcy” on television and the radio. Instead, they want you to pay your money to them. They promise to settle your debts for pennies of the dollar without bankruptcy, saying they will help you save up a big pot of money. The problem with this is that it almost never works. Why?

• While you are giving them your money, you go into default with the credit card company
• When you go into default, your interest rate goes up--as high as 29%
• Your late charges and fees also go up
• Credit card companies start to sue
• Your wages start getting garnished
• Your bank account gets garnished
• Creditor calls do not stop
• You pay money to the debt settlement company, much of which does not go into a pot to pay creditors, but goes to the debt settlement company
• If you actually “save” enough money to make a settlement offer, you are making it on a much higher amount than you owed before
• If you settle for a discount, the discount you settled for is almost a much as you owed in the first place
• The “debt settlement” company wants a big fee for doing what it did for you.

You will end up worse off than you started. Paying hundreds if not thousands of dollars to the debt settlement company. Finding out after suit(s) have been filed against you and wages garnished that bankruptcy is the better option.

Debt Settlement Companies are scams and will almost always leave you worse off than they found you. Contact your Montgomery County Bankruptcy Attorney to discuss your options. Your Baltimore Bankruptcy Attorney will give you a free consultation. My job is to give you the options that are right for you--not what is right for me.