What is Your Position on Debt Settlement? – Rich

“Dear Steve,

I think what you have created is brilliant. Your Web site is a dynamic assortment of good and honest truths. You exert a lot of common sense and provide a copious amount of opinion-based responses. Most of which, I’m sure, is from your own battle with debt.

I have a specific question that is merely frank:

What is your position on debt settlement? Do they work? Should our Government do an immediate step-in and halt these institutions? If stand “with” debt settlement, would you expound why?

I am not looking for a lengthy answer. I will leave the length of your responses to your discretion.

I have not cited your work and would ask full permission if intending such.

My intentions are merely fact finding.

Thanks so much,


Dear Rich,

It’s amazing how such a simple question can have such a multifaceted response.

Debt settlement is a technique that has been around for yours. Back in my debt management days when I was running a non-profit credit counseling group we used debt settlement in some limited cases. The best cases were those people that had at least 60% cash on hand of the debt. When an agreement was made with the creditor the funds could be paid immediately. Not all creditors agreed and my policy was that if an agreement could not be made then the entire settlement fee of $495 was refunded to the consumer.

Doing debt settlements required my staff of negotiators to be aware of daily policy changes by creditors and to know who might accept a settlement and who would not. The creditor policies changed frequently. You’d have to talk to Damon Day about current creditor policies. The value in hiring a debt settlement company is not the physical process of calling a creditor, but knowing who and when to call.

Consumers in the modern debt settlement world suffer from a lack of information and transparency as I ranted about here. And at least one company, US Debt Resolve has risen to the challenge to fully inform consumers of the their metrics in debt settlement. You can read more about that here.

Modern debt settlement. Without experience consumers take risky chances.

Outside of US Debt Resolve, no other company I am aware of discloses to consumers what the realities are. But the sales people tell a tale. That tale is one of a painless way to payback 50% of what you owe, stop collection calls, avoid lawsuits, monthly payments you can afford, etc. Quite frankly that’s all bullshit.

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While my company back in the day offered settlement attempts for select creditors with cash-on-hand and a full money back guarantee, the modern day debt settlement company appears to misrepresent reality, offers no real guarantee, charges thousands in up-front fees, and sets such unrealistic expectations that consumers are going to be disappointed.

My inside sources tell me that probably by July, 2010 the Federal Trade Commission will come out with new rules that will govern debt settlement companies. These rules are needed. But one thing I’ve learned over the years is that the wheels of consumer protection move slowly, but they move.

And you need to realize that the reason that the government is looking to regulate the debt settlement industry is because the debt settlement trade associations never would. Just go back and look at an article I posted a year ago about debt settlement industry abuses.

The debt settlement industry is exploding. Some say that many of these new companies are being run by failed mortgage brokers that want to get into the business. I don’t know about that but certainly there is a wave of opportunism evidenced by the exploding debt settlement industry.

The sad thing about this is that as the market gets flooded by newbies, opportunists and people who simply don’t know what they are doing, the industry will get a massive black eye and I predict, either a crackdown or heavy regulation. – Source

The bottom line is that if you want to find out who the good guys are, television or internet ads are the last place to look. The way to find out is the old school way, like Damon Day does it, real knowledge.

Please update me on your progress by

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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