Debt settlement firms are mostly bogus

Debt settlement companies that prey on the hopes of those behind on their bills often leave their customers in the lurch, to face just as many harassing calls and notices as before.

Just ask Gloria Snowden of Baltimore, who signed up with a company that promised to negotiate away her $10,000 credit card debt. Snowden paid the firm $400 dollars per month, and ended up with nothing, and had to file for bankruptcy anyway. If she had just filed for bankruptcy from the start, she would have been a lot better off.

The Associated Press reported that Snowden battled with the company for five years to live up to its promises, before finding out that the Maryland attorney general’s office had jailed the companies leaders for fraud.
Many debt-settlement firms offer legitimate financial services, but a lack of regulation has made it difficult for people such as Snowden to sort the good from the bad. The fast rise of firms has prompted lawsuits and pressed states to draft laws to protect their most financially vulnerable residents.

“The Maryland General Assembly is considering a bill that would cap the firms’ fees, which are often paid before they make a single call to a creditor. In one year, complaints about such companies to the state attorney general’s office have quadrupled to 121. Investigations have been launched in Illinois, Vermont, Maine, New York, and Florida.” It would be worth it for the Massachusetts and New Hampshire authorities to fight these scams as well, for there are plenty of victims right here in the Merrimack Valley.

“It’s a sign of the times. . . . People found themselves in deeper and deeper debt,’’ said Marceline White, executive director of the Maryland Consumer Rights Coalition. “As they were trying to dig out, these firms rose up.’’

 

By Doug Beaton

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