Debt Settlement companies are scamming you

An ABC news investigative report exposes how debt management companies are taking advantage of consumers trying to deal with their debt: Click Here to Report on Misleading Debt Settlement Companies.

These debt settlement firms are the ones you usually see advertising on TV.  They make all sorts of claims in offering debt solutions.  Some claim to be government programs, one says you can stop paying your creditors forever, and all claim that they can help you reduce your debt without filing bankruptcy.  I have long said these claims were not to be trusted.  Now the FTC has confirmed it.

If any company or organization asks for an upfront fee (usually thousands of dollars) to offer you debt help without filing bankruptcy, run the other way as fast as you can.  Only a very small percentage of people actually get any help at all.

The best alternative to bankruptcy is a debt management plan, which works like this:

All of your creditors are contacted and told that you are going into a debt management plan.  They will start getting paid once a month, IF they stop piling up interest and late fees.  Often previous interest and late charges are eliminated, and a lump sum total is fixed.

You send one monthly check to the debt management organization. They take out a small processing fee and send the rest to your various creditors, usually collecting a small commission (8% is typical).  This goes on until the agreed upon amount of debt is paid off.

The only organization I trust to conduct debt management plans effectively is one I have had experience with, Consumer Credit Counseling Services.  You can find local branches and more information at LINK www.nfcc.org.

Here are the names of the six worst debt settlement offenders according to the FTC:

Freedom Fidelity Management, Procorp Debt Solutions, Web Credit Advisors, A New Beginning Financial and Ministries, Credit Solutions of America and FreedomDebt.com

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