We Are On Disability and Social Security and the Debt Settlement Company Says They Can Help. – Brett

“Dear Damon,

I am on disability with a an income less than 30% of my working income. My wife has a start-up business that continues to lose money and has been unsuccessful at finding a job.

During the last 6 years on disability we burned through our savings as well as accumulating about $200,000 in unsecured credit card debt. Although on creditor was willing to put us on a 5 year, 0% interest payback plan, other creditors (notably BoA) were unwilling to negotiate. One card for $35,000 has defaulted and gone to collections.

Given our situation, not getting by on our disability and SS income, while our credit card dilemma gets worse as we default on more cards, we are considering debt settlement as well as bankruptcy.

The debt settlement companies claims seem hard to believe (they guarantee all accounts will be settled for 40%, and they will eat it if the settlement is over 40% !!!, and for an additional $1000 at the end of the 3 – 4 year settlement period, they will remove all bad items on our credit report!).

What do you recommend? My feeling is that Bankruptcy will give us a faster way to recover. The debt settlement company just sounds like a scam to me!


Hello Brett,

scammerIn my opinion the debt settlement sales person is an idiot. Sounds like he is more worried about making a sale than helping you. So what if they settle your debt at 40%. Any monkey can do that. Where is the 80,000 dollars going to come from to settle these debts? Plus the $30,000 to $40,000 in fees they want to charge you? This sales guy is either stupid or diabolical, neither of which are good for you. You won’t even make it to the end of their mythical 3 to 4 year period before you are likely sued and end up in BK anyway.

Your instincts sound like they are right on. I don’t know everything about your situation, but listening to this sales guy with all of his idiotic guarantees is not an option regardless. A chapter 7 BK would run about 2,000 vs the settlement plan with fees and best case scenario would run about 110,000. If this guy is not encouraging you to at least meet with a bankruptcy attorney before he tries to slam dunk you into his plan, it is just criminal in my opinion.

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I recommend you use the big blue buttons in the resource section at the top right and find a local bankruptcy attorney to speak with about your situation. You can’t make any decisions until you at least know how a BK filing may or may not effect you.

If you can qualify for a chapter 7, and wipe out all the debt, that is probably going to be a no brainer. If you can’t qualify for a 7, a chapter 13 sounds like it would still make a hell of a lot more sense than settlement. In fact you could come out of a chapter 13 potentially paying much less than 40% and you would have complete legal protection the entire time. No phone calls, no hassles, no lawsuits.

If you are still unsure after you meet with the bankruptcy attorney, then click the blue button to talk to a professional debt coach. That will connect you with me, we can dig into the details and put together a realistic solution.

PS. That debt settlement sales guy is going to be all over you like white on rice because he is looking at you like a big pay day. 30,000 in fees is a lot of Benjamins and they won’t let that go without a fight. So prepare to be annoyed by them. I would just start routing him to voicemail like you would do to any debt collector because all he is trying to do from you is collect.

PPS. If you are still on the 0% interest plan with the other cards, you need to take a serious look at that as well. If BK is a viable option then you may just be throwing good money after bad at this point by trying to keep up on those payments. But don’t act on that until you have a plan in place and know how you are going to move forward.

Damon is a talented independent debt coach that provides in-depth assistance and consultations for people struggling with debt. If you want a personal debt coach to help you through a difficult situation or want assistance to find secret discounts offered by debt settlement companies I think Damon Day is an excellent person to contact for advice and assistance. He can be reached directly at DamonDay.com

If you have a debt related question you’d like to ask, just use the online form.

Damon Day is a talented Debt Coach who offers fee based consultations to consumers as an alternative to the typical free debt relief consultations which are nothing more than thinly veiled sales pitches lacking any real information to help a consumer make a good decision. You can learn more about how he can protect you from getting ripped off at DamonDay.com