1/18/2010 7:00 AM (PST)

If you still looking for a debt settlement company let me know. We are a top debt Settlement company in the business. You can go to our website and read reviews.

1/19/2010 9:02 AM (PST)

The experience of the BBB with debt settlement firms has been decidedly negative. Most people who complain about these companies state that their debts weren't negotiated, they were told to stop making payments, and the result is that they're in worse shape than when they started. Many are sued and are forced to file bankruptcy to rid themselves of the lawsuits. Debt settlement companies have a good sales pitch that makes the program seem like a no brainer. Unfortunately, it's a mirage. This industry is rife with companies using predatory fee models and it's completely, totally sales driven.

You should check out the proposed rules on fees and disclosures that the FTC is considering for the debt settlement industry because of the rampant abuse. The Federal Trade Commission issued a press release about these on July 30th, 2009: http://www.ftc.gov/opa/2009/07/tsr.shtm. In fact, these rules will shut down the industry as it stands today.

Debt settlement is a topic the BBB of the Southland has posted about on our Facebook page:
http://www.facebook.com/pages/BBB-of-the-Southland/117568537756

Avoid these kinds of companies. If you haven't done so already I would start your journey with a call to a reputable nonprofit credit counseling agency that will identify and explain your options. The counseling session will be FREE. The National Foundation for Credit Counseling's direct agency referral number is 800-388-2227. This will connect you to an accredited agency in your area. NFCC agencies have to be accredited by the Council on Accreditation of Children and Family Services (www.coanet.org).

At one of the FTC forums on debt settlement a representative of the National Foundation for Credit Counseling provided some commentary to the FTC about the debt settlement industry:

“Let’s take a look at the debt settlement business model: Advertise aggressively on TV and radio. Promise consumers that they will stop collection calls and settle debts quickly and easily for pennies on the dollar. Be secretive about the fees. Collect huge up-front payments before providing any services… Consumer gets to pay exorbitant fees and monthly payments, gets little or no disclosures. He’s subject to legal collection efforts including litigation, judgment, garnishment of wages. His credit history is trashed. At the end of the day he gets a bill from the IRS for tax liability.”

That about sums it up.

1/27/2010 11:46 AM (PST)

BBB expert this is not a fair nor balanced review of the consumer's options.
First Credit Counseling with its Debt Management counterpart is NOT an alternative to Debt Negotiation. The two services help two VERY different consumers in debt.
This would be like me comparing dentists and doctors, both are medical professionals but help with different medical issues.

Debt Management helps consumers who simply need reductions in interest rates, or have a variety of secured and unsecured debts. The total amount of debt to use CC or DM is low $2,000 and above. The consumer does not need to prove a financial hardship to join the program. The company is compensated both by the consumer and the creditor. The consumer can still be sued and collection calls can still be made, although it becomes far less likely IF the agency has a relationship with that creditor. DM does not reduce principal debt, you pay the debts in full and normally over a 5-7 year time frame. Your credit is severely damaged. An 8 year plan at $50/month for service fees works out to $4,800

In Debt Settlement the consumer MUST have over $10,000 in unsecured debt, such as credit cards for the service to have a strong financial benefit. You must have a financial hardship in order for a negotiation to be feasible. The company is compensated ONLY by the consumer. You can be sued, and you can receive creditor calls and yes your credit score will be severely damaged (if it is good in the first place). Negotiation reduces your principal debt. The industry average is %50, however if you add in fees that equates to about 40%. Negotiation takes about 2-3 years and will cost you about 10-12% of the debt. So to follow the example above a 40k debt will cost you $4,800 at 12%. Negotiation is for consumers who are one step away from bankruptcy.


Credit Counseling has a free consultation session to work out a budget and plan and see if professional assistance is necessary.
Debt Negotiation has a free consultation session to work out a budget and a plan to see if Debt Negotiation is appropriate and necessary.

Credit Counseling and Debt Mangement industry has had their fair share of companies that have conducted fraud, and provided poor service. http://www.ftc.gov/opa/2004/03/credittestimony.shtm
Interestingly, many Credit Counseling companies now offer debt settlement, and or have converted their business entirely over to Debt Settlement.

Every industry has its bad players, Lawyers, Accountants, Financial planners and even doctors. To say that the entire industry is bad because a few are bad is not sound logic.

Just as you should when you hire any service you should check with the FTC your State AG, Local chambers, look at the licensing and read reviews.

Debt Settlement is not a solution just anyone could or should use, nor is credit counseling or bankruptcy. Evaluate your finances, determine your long term goals, understand your options and select the most appropriate debt relie

2/5/2010 8:50 AM (PST)

A previous commenter to this question provides some good info on the difference between "debt management" and "debt settlement" - they are in fact two very different business models. There's been a lot written on the differences between the two and the Federal Trade Commission is very much aware of these differences. They have not come down on the side of the debt settlement operators. The FTC has scrutinized the fee schedules commonly used by these settlement companies, in particular the timing of fees (usually front end loaded) and the high level of these fees.

The FTC has also looked at this industry's marketing practices, typified by rampant, dishonest broadcast advertising by third-party "lead generators", as well as spammers, illegal telemarketers, and other low forms of life. Widespread use of these practices in this industry has deceived many thousands of consumers.

A good roundup of the recent FTC public forums, investigations, and Notice of Proposed Rulemaking on debt settlement/negotiation can be found at:

http://www.venable.com/ftc-hosts-public-forum-on-proposed-debt-relief-amendments-to-the-telemarketing-sales-rule/

Again, check out the "BBB Criteria for Evaluating Debt Settlement Companies" posted on our Facebook page on October 28, 2009 (click on the Notes tab and then scroll down to October 2009). These criteria for evaluating debt settlement companies are very stringent because of the rampant abuse and predatory fee models that are so widely used in this industry. That being said, we know there are some debt settlement companies out there who are reputable and who deal fairly with their customers. We hope they can wait out the storm and pick up the pieces as this industry shakes out.

8/8/2010 7:25 PM (PST)

I've used New Path Financial and I would strongly advise staying away from this company! They promise to settle your accounts for pennies on the dollar, but beware. Creditors can sue you any time. Creditors don't have to work with New Path Financial (some have told me they will never work with New Path Financial). New Path Financial will advise you to stop paying creditors and not to speak to them either. If Chase or whoever can't get a payment and can't get in touch with you, they'll just summon you to court and garnish wages or issue liens. Try and work something out with your creditors and avoid companies that are sales driven and all about profit.