Damon Day had an excellent observation on his site in a post he wrote after the Senate Hearings yesterday on debt settlement. His concern is for people who have enrolled in a debt settlement program in the last couple of years. Since the debt settlement companies typically take their fees during the first couple of years the consumer is enrolled it can create a massive problem when the debt settlement companies are going to be prohibited from continuing that practice by rules and legislation.
If you sign up with a company with this sort of fee structure today, it is highly unlikely that the company will be around when you need them. In fact USOBA openly testified to the FTC a few months ago that 85% of their members will go out of business if the advanced fee ban becomes law. A front loaded fee structure is horrible for consumers under normal circumstances, and it is basically financial suicide to enroll in one of these programs now with the proposed legislation looming. – Source
Debt settlement companies that have been taking their fees up-front from consumers have basically operated a massive Ponzi scheme where the money from a client enrolling is spent often years ahead of when they receive any actual service so new clients must be enrolled to pay for the services of those old clients.