I’m Trying the John Commuta Debt Avalanche Approach but Think I Should be Doing Debt Settlement. – Jerry

“Hi Steve,

I’m drowning in debt–about 60,000–but was managing to pay off some accounts and really wanted to do the John Commuta thing, debt avalanche…go that route. To do it, I had to do some juggling between accounts because I’m freelance and my income varies from month to month, but still, it was working and I could see my way clear. Then everything changed. When the banks started shrinking credit and cash lines and upping interest, it kind of sabotaged my plan. I’m hanging on by my fingernails now and it’s starting to look hopeless. As they lower my limits, I’m trapped in the incredible shrinking box.

I’m starting to think about debt settlement, but will this ruin my credit? My score’s around 660 now, not good, I know. So now I’m thinking, if I self-destruct through debt settlement, how much do I have to lose? It’s getting hard to stay afloat, and I feel close to crash and burn. It hasn’t happened yet, but can you tell me what’s the worst possible thing that could happen if I do try debt settlement? Is it fatal to my credit rating, or a sensible option? Or is it better to just walk away? And is it OK if I negotiate myself? I’m good at PR, and think I can handle it. The companies that advertise seem a little skanky, but do you think hiring a company that has a lawyer attached is a good move? Sounds expensive, but I owe so much that maybe it’s worth it. Help!

One more thing: Seems to me that so many people must be in this boat that the credit rating standards will have to change in the future. I mean, if a lot of people opt for debt settlement, do you think they’ll have to readjust the curve? Or that it will be easier in the future to improve a bad rating that comes from debt settlement or crash and burn? Bottom line: Like so many others, I want to do the right thing and pay my debts off, but these killer interest rates and shrinking limits are unbeatable. From your perspective, do you think that so many of us will crash and burn that the banks will have to welcome us back in the future?

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Thanks so much for what you do. I think it’s amazing.


Dear Jerry,

Thank you for writing to me. Your question really brings up some great points.

First, you made a statement that a debt settlement solution that has a lawyer attached to it must be a more legitimate solution. Sadly, no. Just search GetOutOfDebt.org for “Allegro Law” and you’ll find sordid details about a debt settlement lawyer company that not only was closed down but the lawyer lost his license. This is not the only example. Do a search for “Hess Kennedy”, a Florida law firm that was also put out of business.

Secondly, I think that a debt settlement approach is going to be a failure for you as well. Not just because debt settlement does not work for most people, but because of your income situation it will be nearly impossible for you to have the lump-sum money on hand to settle right now. If you enroll in a monthly payment debt settlement program you will not be able to pay all their front loaded fees and save money to actually settle.

During the time you are saving, a s*%$^ storm of collections, bad credit, and a lawsuit or two will rain down on you. Debt settlement will result in years of bad credit, a big potential tax liability and being sued.

Frankly, the better answer is bankruptcy. You should go an talk to a local bankruptcy attorney and discuss your situation. Most bankruptcy attorneys offer a free bankruptcy consultation so you can get all your questions answered.

The irony is that bankruptcy will discharge this debt quicker than debt settlement, will not result in a tax liability, will stop collection activity and block lawsuits.

Once you go bankrupt you will then be able to rebuild your credit and be able to get credit again in the future. If you do go bankrupt, come back and ask me for help rebuilding your credit and I’ll show you how. It’s actually ridiculously simple.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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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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2 thoughts on “I’m Trying the John Commuta Debt Avalanche Approach but Think I Should be Doing Debt Settlement. – Jerry”

  1. Hello Mr. Rhode,

    I actually have worked at a few debt settlement companies, and have enjoyed reading the articles posted on your site. The families that write you are the same ones that I used to talk to every day. It’s unfortunate that it’s so hard for people to find a safe route to financial freedom.

    I’m wondering what you think the most reputable program is? Is BK really the best option?

    Also let me know if you have any questions about the inside scoop on settlement companies…

    • Michael,

      If we look at the situation backwards, from the goal that must be achieved in each situation, for someone that is struggling to pay the bills, can’t deal with the stress of collections, wants to avoid being sued, wants to resolve all their debt, and needs to move forward with their life, bankruptcy is the better solution. Debt settlement can be effective is someone has a few creditors that want to play nice and has a wad of cash on hand right now to settle all the debts at once. But that is the vast minority of people desperately seeking a magical debt settlement solution.

      I’ll contact you to find out what you learned from being inside the debt settlement world. Thank you for your generous offer to share.



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