Given that the whole country is still in the grips of the most severe financial crisis since the Great Depression, with millions of Americans falling behind on credit card payments, you would think that this would be boom times for the debt settlement industry. Well, I for one am truly glad that I do not own or manage a debt settlement company! The industry has been under attack for many years, by regulators, consumer groups, and of course the credit card banks. Lately though, the bad news for the industry just keeps coming thick and fast.
The New York Times recently published an article that essentially describes the entire industry as being far more harmful than helpful to consumers. I feel sorry for any settlement sales rep trying to “sign up” consumers who have read this article first!
Consumer Reports then joined in the fun with an article that basically calls debt settlement companies “scams.” Ouch! (Full disclosure: Yours truly was interviewed a couple of months ago by a reporter from Consumer Reports. Sorry guys, I only told the truth!)
But the industry’s problems don’t end with bad press. The Illinois Attorney General’s office recently sued two prominent debt settlement firms, and those cases are pending resolution.
Then came the kicker – an announcement by Andrew Cuomo, Attorney General for New York, that his office had launched a nationwide investigation into the debt settlement industry, with subpoenas issued to 14 prominent firms. It will be very interesting to see the published report issued after the investigation is completed, but I doubt there will be anything positive in it with respect to most of the companies listed.
Hopefully, all this negative publicity will make consumers more aware of the pitfalls of using a debt settlement company.
IMPORTANT: The reason for all these attacks by media and regulatory bodies has nothing to do with the concept of *negotiating a settlement*. Settlements, after all, are what the banks do in order to reduce their losses. Rather, the problems are with the *companies* that charge huge fees to do something consumers can do just as well on their own (better, actually). Folks, stay away from third-party settlement companies! Learn how to negotiate and settle your own debts. If you are a good fit for settlement in the first place, there is absolutely no reason you can’t learn to tackle the project on your own, with a little help from ZipDebt. 🙂