Bankruptcy

Debt Settlement Companies Described As Consumer Scam By N.Y. Times Article

By Jonathan Alper

Don't hire a debt settlement company until you read this New York Times article by Peter Goodman. The article describes how the poor economy has lead more people than ever to try debt settlement and consolidation services to resolve credit card debt in order to avoid bankruptcy. It states that most consumers who pay debt settlement firms end up with worse credit and less money an no solutions. It compare most (not all) firms to ponzi schemes.

My own interviews with clients who have tried debt settlement is consistent with the N.Y.Times report. These companies charge up front fees and usually fail to deliver what clients need the most, which is, more money and their old job back. No one wants to file bankruptcy, and people in financial difficulty may see debt settlement companies as their last resort. It works sometimes, but as the articles shows, the debt settlement industry's own study finds that in most cases debt settlement plans fail to rescue the consumer.

I don't think all distressed consumers should file bankruptcy; bankruptcy should be a last resort. Don't make your situation worse by throwing your last remaining money at debt settlement plans without fully investigating the company and carefully considering the bankruptcy alternative.

Full post as published by Florida Bankruptcy Law on July 01, 2010 (boomark / email).