What About These Commercials Saying You Can Reduce Your Debt to a Fraction of What You Owe? Is it BS? – Jeff

“Dear Steve,

I have a lot of debt. Credit cards and student loans. I here all these commercials saying you can reduce your debt to a fraction of what you owe. Is this just a lot of hype or is it for real? Do I have to file bankruptcy or meet some other kind of criteria to qualify for these services? If these companies that claim they can help you are for real, can you recommend one?

Thank you,


Dear Jeff,

Are their some “good” debt settlement companies out there? Yes, there are some that operate as authentically as they can.

But I do have a basic bone to pick with the debt settlement industry and the folks that run to it as some sort of a magic solution. Debt settlement falls into that same old wise sage advice that there is no free lunch. The big stumbling blocks with debt settlement are:

  • Your creditors may not settle your debt.
  • Debt collectors will still call and contact you until you can reach an agreement with a creditor and pay it in full.
  • Your creditors may sue you while you are attempting to settle your debt.
  • Your credit will be shot.
  • Depending on your financial status after you settle the debt you could owe the IRS a big tax bill.

Personally, I think you are much better off looking towards bankruptcy as a solution to repay your debts for a fraction. Here’s why:

  • Once you go bankrupt collection calls must legally stop.
  • Creditors can’t sue you.
  • There is no tax for forgiven debt in bankruptcy.
  • It is easy to rebuild your credit.
  • You will have to repay nothing or only a part of what you owe and the amount is controlled by the court, not the creditor.
  • This solution includes and is binding on all your creditors and not just those that want to play the debt settlement game.

Please update me on your progress by

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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P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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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1 thought on “What About These Commercials Saying You Can Reduce Your Debt to a Fraction of What You Owe? Is it BS? – Jeff”

  1. Hey Jeff,

    My mother taught me something when I was a kid that sort of stuck with me. One day our washer broke in the garage and she told me to get the yellow pages (this was before Al Gore invented the internet :-)) and find the small Ads for appliance repair and call a few of them. I asked her why she didn’t want me to call the nice looking ads with the color pictures of the satisfied clients?

    Her response was, I don’t want to pay for all that fancy advertising. I think that applies here. I know what these companies spend on their fancy advertising and guess who pays for it? Whether or not debt settlement is a better option than BK for you depends on your situation as Steve said. And you need to figure that out before you even consider calling a debt settlement company.

    But your chances of actually finding legitimate help by responding to a television or radio ad is slim to none.

    They spent a lot of money on those things and by golly they need to sign up clients to pay for it. You will not call their 800 number and get a financial consultation. You will get a sales pitch that tells you why their program is the best thing you could possibly do, you must sign the contract and get it right back and you get a special deal bla bla.

    I think you get the picture 🙂
    .-= Damon Day´s last blog ..Debt Settlement Companies – Top 5 ways they can Screw you! =-.


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