The sad truth about debt settlement companies....

In my years of experience dealing with debt collections and credit related issues, nothing angered me more than stumbling upon these so called "Debt Settlement" companies. My first run in came while I was still working as a debt collector for a company that purchased defaulted credit card accounts and unsecured loan debts and collected on the balance. I was already getting fed up with the unethical tactics that I was being pushed to use (to collect on the credit card debts) and at first thought that these guys may actually be helping the consumers settle their debts and it seemed like a great idea... until I learned how they really work and how they really make their money.

It turned out that they were actually worse than the creditors that they claimed to "protect" the debtors from. Most people were actually ending up in more debt and more financial trouble than before they got wrapped up in the debt settlement scams to begin with. They were merely preying on the emotions of the consumers and profiting off of the debtors already bad financial situations.

Call after call they were daring me to sue their clients and the clients (the debtor) had no idea because they had signed power of attorney over to the settlement company, who sent me a Cease and Desist Notice... leaving me powerless to let the consumer know that they were getting scammed out of what little money they had left.

The money they were paying the debt settlement company was simply going to pay inflated fees and various "administration" and "handling" fees. Very little, if any, of their payments were actually going to pay their debts. In the mean time, their credit report was slipping down the drain and their creditors were lining up at the courthouse to sue them, garnish their wages and put liens against their property. Funny thing is that if the accounts went to suit, the debt settlement company did not represent them... they were on their own.

On average, if the debt settlement company did settle an account, they were the only ones that benefit at all. to settle a $10,000 account would cost the debtor over $8,000... the debt settlement companie's profit was over $4,500. The debtor could have settled the account on their own for around $5,000 and not had to pay anyone to do it. Not only did they get hoodwinked, but their credit is destroyed and they can't charge a stick of gum at a country store.

Some deal, huh?