WARNING: Credit Relief, Industry Puts Debtors in a Deeper Hole

[Jeffersons Ghost]

PALM BEACH, Fla. — For the companies that promise relief to Americans confronting swelling credit card balances, these are days of lucrative opportunity...

At a well-lubricated evening reception, a steel drum band played Bob Marley songs as hostesses in skimpy dresses draped leis around the necks of arriving entrepreneurs, some with deep tans. The debt settlement industry can afford some extravagance. The long recession has delivered an abundance of customers — debt-saturated Americans, suffering lost jobs and income, sliding toward bankruptcy. The settlement companies typically harvest fees reaching 15 to 20 percent of the credit card balances carried by their customers, and they tend to collect upfront, regardless of whether a customer’s debt is actually reduced.

State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are being fleeced of their last dollars with dubious promises. Consumers rarely emerge from debt settlement programs with their credit card balances eliminated, these critics say, and many wind up worse off, with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors.

http://www.nytimes.com/2010/06/19/business/economy/19debt.html?hp=&adxnnl=1&adxnnlx=1276948996-VUiY3HyX2B5+kYTlZWxMTw

[marmar]

1. One gets the impression that if it weren't for fraud, schemes, deception and usurious fees.....

.... the American economy would collapse, completely.

[Jeffersons Ghost]

2. It seems that way sometimes. please kick this up to warn DUers in debt

[depakid]

10. That's not too far from the mark

[Octafish]

22. That's why the Smart Money is in Switzerland.

Know your BFEE: Phil Gramm, the Meyer Lansky of the War Party, Set-Up the Biggest Bank Heist Ever.

[NNN0LHI]

3. One of the nicest persons I knew(I thought) tried to scheme $500 out of me during a past recession

Tried to get me involved with a Pyramid Scheme. All it took was a $500 "investment" and I would be rolling in the dough. First I didn't have $500 and if if I did I wasn't going to "invest" it in a scheme for fools.

He knew I had two little kids at the time too. We had him and his wife over to our house for dinner. His wife was also trying to sell the scam to me real hard.

In tough times the only person you can really trust is yourself.

Its predator and prey out there right now. Got to be careful.

Don

[Imajika]

16. You are so right...

"In tough times the only person you can really trust is yourself."

This.

People often don't realize this but, unfortunately, many/most folks will do almost anything if they perceive they must to safeguard their survival (and that of their families).

Backed up against a wall, the most seemingly decent people will sometimes rip you off for all you've got.

Your post really made me think about that. It is very sad sometimes to realize how awful we humans can be. Yes, people are sometimes incredibly courageous and caring, but when in a corner many will sacrifice you if it will keep them going.

"Its predator and prey out there right now. Got to be careful."

Indeed.

[NNN0LHI]

19. During this recession I have witnessed one family member steal hundreds of thousands of dollars...

... from another family member. They are fighting it out in court right now making lawyers rich(er).

Only consolation is they are both Republicans and I can't stand either of them.

Don

[Jeffersons Ghost]

20. a sort of justice for you, huh?

[NNN0LHI]

23. What is this a trick question?

Who gives a shit when you have two wealthy Republicans groveling over a few crumbs like its their last meal?

Not me.

Don

[unhappycamper]

4. The Better Business Bureau works for consumers?

Who knew? :sarcasm:

[Jeffersons Ghost]

5. I remember when I first heard of them and reported a business to them...

It didn't bother anyone at the reported business at all. Their idea of better business is more business for them. As a consumer watch-dog they're nothing.

[SoCalDem]

6. There is a time when people are so deep in debt, that they need to face it

and just declare bankruptcy. 99.99999% of the "fix-it plans" fall flat, and leave them in worse condition, with thousands more thrown down a rat hole.

NO ONE is "in it" just to "help" you. They are in the business to MAKE MONEY..your money..at a time when you already don't have enough to pay your bills :(

So your precious FICO score takes a hit.. If you cannot pay your bills it's probably not a great time to take on debt anyway, and no one cares about a FICO score if you are paying cash..People also forget that prolonged debt, with a sketchy payment history will kill a FICO score.

If your job is relatively secure and your are in a home/apartment that you can see staying in for a while, and you are in massive debt that you cannot pay off, do yourself a favor and borrow the money to file if necessary. Businesses do this all the time, and the intentional stigmatization of personal bankruptcy no longer applies.

You cannot discharge school loan or tax debt, but if you can get rid of the rest, and then never use plastic again, you can turn it around..

[Lost4words]

9. bankruptcy doesn't do anything anymore, they dont forgive debt

they take over your assetts and income all for a percentage of the debt so you end up on the hook for your debt and the added cost of a special manager. I have looked into it, it wouldn't help my sorry ass and it wont help many others. The bankruptcy laws changed in 2005.

Thanks to pukes and the help of the Democrats!

[hayu_lol]

15. Lost4words...that was the beauty of JOE BIDEN'S...

Bankruptcy Bill. He really took care of the credit card loan sharks.

[SoCalDem]

21. It still does depend on your state, to a large degree

Out here, the "interview"re-education/counseling" part has more or less been done away with, since so many people are darned near destitute..and unless the assets are substantial, most of the creditors don't really want the "stuff" anyway.

[Statistical]

28. Regardless of the state if you pass the means test you aren't gettting a chapter 7

Chapter 13 and a plan to pay back your creditors (at least partially).

Joe "Mastercard" Bidden took the in-debt American to the ringer with that Bankruptcy "reform".

[Jeffersons Ghost]

11. great advise

[pruple]

7. K&R

[Bluenorthwest]

8. Criminality at every level

That is the American culture. Well, it is the Christian majority culture. The one we want to change into something fit for humans. The churches teach bigotry, and bigotry allows for corruption. They teach bigotry because it allows them a population they can 'righteously' lie to and steal from. The 'sinners'.

[dixiegrrrrl]

12. ty and kicking.

[Jeffersons Ghost]

18. thanks for K&R

[Bryn]

13. K&R

[Catherina]

14. What a country! Profit before conscience. Lie, cheat, steal but fill your pockets n/t

[Oilwellian]

17. There are good ones and bad ones

About 5 years ago, we cosigned a car loan for my youngest son. He was late on a payment and it pushed the interest on all of our credit cards up to 26-28%. I was paying hundreds per month in just interest alone and we decided to go to a debt counseling company to help us lower the interest rates. Our attempts to do so on our own didn't work, but when we got a debt counselor involved, they were all lowered to 9% and we paid it off in 3 years. The counseling company's fee was $40.00 per month, FAR less than what we would have paid in interest alone had we not not gotten the interest rates lowered. So there is a great advantage to going this route, you just have to shop around and read the small print. Once the debt was paid off, our FICO score went up to a decent level within a year. Never again will we play the credit card game. We still own 2 of them but never charge more than we can pay off within a 3 month period. It's a shame you have to take out credit to maintain a FICO score. The lesson we learned is to do it in small amounts.

[TheKentuckian]

24. K&R this needs to be seen

[fascisthunter]

25. I Have plenty of student debt

I've been working, penny-pinching just to pay it off. Been doing so for the last 5 years... will be doing so for a long time. What a waste of money my education was....

[Raster]

26. Education and it's cost are wielded much like weapons in modern America.

A country that truly wants its children to have a good education pays for it--FOR EVERYONE.

[fascisthunter]

27. Yup... like Germany

and many other nations who take pride in their people, unlike here where we Americans are pretty much disposable, unless we come from families that are well off and connected.