Debt settlement companies thrive on tapping the consumer’s genuine desire to pay back their debts. They promise that they will compromise with your creditors for a sizable discount and all will be well with the world. There are any number of reasons that isn’t so, and the promoters know it, but that’s another blog.
The scheme works because the debt settlement company gets a hunk of their fee first, before creditors are offered a dime. And they get it by automatic withdrawal from the consumer’s bank account. I have been amazed lately at just how hard it is to cancel one of those payment arrangement.
The couple in my office this week are poster children for the absurdity of the debt settlement program. The numbers supplied to the desperate couple, 79 and 76, showed that $19K would go to creditors and $16K to the debt settlement company. Huh?
The other absurdity was that this couple had only Social Security and a small pension for income, and they have a substantial mortgage payment. Yet, the debt counselors(!) wanted $1036/month for this service! Needless to say, the entire arrangement was unworkable and any debt expert worth a $16K fee knew it from the start.
Yet, the firm got several months worth of $1000 bank drafts before the couple’s son learned what was going on and helped extract them from the “program”.
I’ve turned the Florida law firm running this “business” in to the State Bar of California for investigation of unauthorized practice of law in this state. My next task is to see if the money is recoverable.
