An interesting article out of illinois, Our Opinion: Put curbs on debt settlement companies, contains a very interesting quote from the Attorney General of Illinois, Lisa Madigan.
“What we have learned is that 65 percent of people who initially enroll with debt settlement companies drop out before any communication (with creditors) has been made. Before any of their debt has been settled at all,” says Madigan, whose office has seven lawsuits pending against debt settlement companies. “Those people don’t get a refund. They don’t give you your up-front fees back, they don’t give you your ongoing fees back. You still owe them whatever you signed up for based on that contract.”
She also says,
“For the first few months, all they’re doing is taking their fee. They’re not actually doing any work to talk to your creditors and negotiate a settlement,” says Attorney General Lisa Madigan. “In the meantime, they tell you to stop paying your creditors, to stop paying your credit card bills. By doing that, you have late fees tagged on, your interest rate often goes up because of that, and so you end up with more debt and they still haven’t contacted your creditors.”
These are statements, facts and opinions that I fully believe based on the communication I’ve had with consumers and those inside the industry.
Now some debt settlement companies may come and read this article and say those numbers and statements are not true, and I agree. Those numbers may not be true for their individual company but that does not mean they are not true for the industry at large. An industry that contains a lot of bad actors and companies that are intentionally screwing consumers.
So good companies, if you want the debt settlement industry to get some respect and survive you need to get your trade associations to embrace openness and transparency for member companies and then grow some balls and haul out the trash.