Still Considering Debt Settlement?
The FTC would also like you to reconsider
The Federal Trade Commission has set a deadline of October 27, 2010 on the Debt Settlement practice of collecting advanced fees from consumers.
So what does this mean to you?
Simply put, it means that a vast majority of debt settlement companies are no longer going to continue to do business past October 27, 2010. Why? That's simple too, they can't afford to. In a nutshell, their business model is highly dependent on signing up clients and charging high advanced fees while not providing any credible service. The debt settlement companies simply cannot continue to pay for marketing, call centers and sales staff without the advanced fees.
In my article, "Considering Debt Settlement?" I take a realistic debt settlement scenario and come to the conclusion that the savings, if any, are marginal. Subsequently, the vast majority of debt settlement companies have D and F ratings by the Better Business Bureau and practically all of the advertising I hear on the radio and see on the internet is a flagrant lie. here really isn't a stimulus program to pay off your credit card debt. The Obama plan to get you out of debt simply does not exist. If your account is still with a bank such as Chase or Bank of America, they will not settle your debt for 20 or 30 cents on the dollar. Debt settlement is not a secret that the creditors don't want you to know about. Believe me, they know about it.
But don't take my word for it. Check out the Federal Trade Commission's press release, "FTC Issues Final Rule to Protect Consumers in Credit Card Debt" and their article on their Money Matters website, "Debt Relief Services"
Debt negotiation and debt settlement companies advertise their ability to negotiate or settle consumer's debt for a fraction of the debt actually owed and stop creditor harassment. However, the BBB has received many complaints from consumers alleging that many of these programs do not work as well as some of these companies advertise.
The BBB advises consumers to be wary of companies that guarantee debt settlement, inform consumers to stop paying their bills and ignore creditors, and collect upfront fees prior to providing services.
Complaints on some of these companies allege that creditors continue to harass clients, fees and interest continue to accumulate, and that the companies do not contact the creditors. In some cases, creditors turn the claims over to collection agencies, file suit and pursue collection of the money owed to them. Debts are not always settled, customer's credit can be ruined, and individuals that are sued are often forced to seek bankruptcy protection. Consumers usually experience difficulty obtaining refunds from these companies.
So what should you do? The obvious answer, at least to us at Cornerstone, is to speak to one of our financial counselors to assess your financial situation and put you on the right path to paying off your debt. There is no obligation or cost to you for any of our counseling. We're here to help.
Do I wish I could tap my heals together, wiggle my nose or simply close my eyes and make all my debt go away? Absolutely. However, the truth is that becoming financially successful and debt free takes time and effort. The best we can do is minimize the damage.
Joseph F. Barrero, CEO