The New York Times has posted an article that discusses the growing unrest in the debt settlement industry. David Streitfeld, author of the article, says that the industry is preoccupied worrying about its future.
A formidable array of forces is concerned about the way the settlement companies solicit consumers and negotiate lower payments on their debts. The industry is in the cross hairs of the Federal Trade Commission, state regulators, members of Congress and state legislatures. Credit card companies are not fond of it, and many consumer advocates practically loathe it.
The common complaint among all these groups is that too many debt settlement companies are more interested in helping themselves earn fees than aiding their beleaguered clients. Their ads promise the clients will get out of debt but, critics say, the reality is that they often become even more enmeshed.
However, some of the settlement agencies say that the “bottom feeders” are giving the reputable agencies an undeserved bad reputation. The “bottom feeders” are the ones who didn’t attend the United States Organizations for Bankruptcy Alternatives Convention.
The settlement companies, which number about 2,000, have varying business models but generally develop programs for strapped individuals to pay off a percentage of their credit card debt and avoid bankruptcy.
Regulators and attorneys general “don’t understand what we do and how we do it, and the benefits we provide for consumers,” said Peter McLaughlin of Preferred Financial Services in Andover, Mass.
Understanding might be on the upswing, although whether it will lead to appreciation is a separate issue. Preferred Financial was one of numerous settlement companies that received a subpoena from the New York attorney general, Andrew M. Cuomo, last month as part of a wide-ranging investigation.
There are alternatives to debt settlement programs. The FDCPA has laws that may be able to help you if you are being approached by collectors. Feel free to contact us for more information.