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Consumer alert: be wary of debt settlement schemes

Florida residents have been among the hardest hit financially in the nation. Many of these struggling individuals may be particularly vulnerable to "debt settlement" schemes.

However, the truth is that many of these debt relief schemes simply do not work, and will leave the debtors in just as much, if not more, debt than they had to begin with.

Indebted Americans may be lured by false promises of eliminating debt. Many of these victims are already facing foreclosure, enormous bank and credit card fees and may hope to become debt-free quickly. However, unless consumers proceed with caution and become informed, many of these people will become victims.

In fact, it is estimated that only approximately 10 percent of consumers will become debt-free under these schemes. This is a substantial number as more than 500,000 Americans who owe approximately $15 billion are seeking help through debt settlement programs.

The problem is that many of these schemes are run by debt-settlement companies that are simply out for themselves. They take money from their victims, with disregard for the best interest of their customers. There have even been documented cases of these companies ignoring debt settlement offers so that they can continue to charge exorbitant fees to their clients.

Many of these people are told to stop paying their credit card bills, even if they had previously been current on their debts. Allegedly, debt settlement is only successful if the consumer is already in default. However, this adds late fees, penalties, interest to the outstanding debt, and in many cases, it can lead to lawsuits.

Is this the right way to handle overwhelming debt? By speaking with a knowledgeable and experienced attorney you will find out the answer to this and all of your questions concerning credit card debt and the help offered by bankruptcy law.

Source: Main Street, "Debt Settlement Schemes Only Help One In 10 Consumers," Brian O'Connell, Oct. 18, 2012

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