Millions of Americans are still struggling with growing debt, even though the economy is recovering. Many feel desperate for help. But be leery of debt settlement groups—you may end up further in debt.
Debt-Settlement Firms
Basically, a debt-settlement company is saying “ok, you have all this debt, and we can settle it for approximately 45% of the debt,” said US Postal Inspector Robert Clark. That is the pitch some debt-settlement firms are making to consumers. “They tell the customers to stop making the monthly payments to the creditors and stop speaking to the creditors as long as you can make one monthly payment to them,” said Clark.
Contracts With Hidden Fees
Customers are asked to sign a three-year contract, and if they do, all of their debt will be paid off. Sounds like a great deal until you see all the hidden fees and charges.
“Some of the victims that we’ve spoken to admitted they didn’t even ask what the fees were because they were so happy to stop paying all the credit cards and pay one monthly fee that was affordable,” said Clark.
Relief quickly turns to anger when consumers realize the money they were paying had not been sent to creditors.
“A lot of the victims called once they realized there was no money in their escrow accounts,” said Clark. “The company would then point to the stipulation in the contract that says they’re allowed to collect these fees.”
Postal Inspectors say in one case there were more than 1,300 victims and $3 million in dispute. Anyone interested in these services should discuss the idea with someone before going ahead.
“Someone that you trust that would have good financial sense,” said LPD Officer Erin Spilker. “You don’t want to end up paying extra fees, and that will not help you get your debt taken care of.”
Read Contracts Carefully
Read a contract very thoroughly. If you don’t, you could end up being the victim of a scam.
KOLN-TV – Chad Silber, June 10, 2013
About David Soble: David is a seasoned real estate and finance attorney with more than 35 years of experience, combining his background as a “big bank insider” with a commitment to demystifying complex legal issues for his clients. As the founding attorney of Soble Law (also known as Soble PLC / Proven Resource), he leads a specialized team in Michigan and Ohio that handles real estate transactions, contract disputes, probate, and financial litigation. Known for a practical, no-nonsense approach and peer-rated excellence (Martindale-Hubbell AV Preeminent), Soble and his team strive to protect clients’ property and financial interests with clarity, integrity, and experience.
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own qualified attorney.
