Beware Debt Settlement Companies

(CBS)  You've probably seen the ads for debt settlement companies.

They claim to help you get out of debt.

But, reports "Early Show" consumer correspondent Susan Koeppen, some are cashing in - and they're not helping their clients.

Consumer advocates across the country are being flooded with complaints about some debt settlement companies, Koeppen points out, with millions of Americans deep in credit card debt.

So, stresses Koeppen, be careful whom you turn to for help.

Koeppen told the story of one Minnesota couple claiming they wound up worse off after dealing with a leading debt settlement company, Credit Solutions of America. The company disputes their story.

But Illinois Attorney General Lisa Madigan tells CBS News the debt settlement industry, as a whole, is targeting vulnerable consumers. "You would be more likely to settle your debt by buying a lottery ticket than by signing up with a debt settlement company," Madigan says.

Madigan has filed suit against seven debt settlement companies in the last year, and is one of six attorneys general targeting Credit Solutions of America, with allegations including "fraudulent, deceptive, and illegal practices" and "false advertising."

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"We want them out of business, she says. "We don't want debt settlement companies to be in a position to rip off people, hard working people who, in this economy, are really struggling."

In statements to CBS News, Credit Solutions claims to have "helped more than tens of thousands of U.S. consumers" and " ... settled over $1.2 billion in consumer debt."

What should consumers struggling with credit card debt do?

First, advises Koeppen, consider negotiating directly with creditors. You can also seek help from a non-profit credit counselor through the National Foundation of Credit Counseling.

Also high on the caution list, Koeppen points out: companies that want to charge you a big fee upfront, or pay a lot of fees. Also be wary of ones that guarantee they can help settlem your debt, and ones that tell you to cut ties with your creditors and stop paying your bills.

To see Koeppen's report, click on the video below:


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[DebtSettlementPro]

And further more, I agree with jordanbessier....why do they continually gouge Americans through compound interest? I will tell you why, because they are criminal enterprises that pay off the people in charge!!! Take a look at this!!!!

http://openleft.com/diary/13011/credit-card-companies-are-criminal-enterprises-loan-sharks-who-pay-off-the-cops

Scott Pugsley - American Patriot

[DebtSettlementPro]

It was disgusting what Senator Ray Rockefeller did to the advocate for debt settlement. Just another one of those people in our inglorious government that is probably getting kick-backs from the banking oligarchs. I wonder who funded his campaign. And if he is also one of the ones who voted for O'bamacare or these new credit card regulations that were supposed to help the American people. Instead, they give almost $800 billion of our tax dollars to the banks and what do they do? They raise the rates and lower available limits essentially crippling the middle class. Are they trying to bankrupt America? I say Everyone in the country stop paying the credit cards on July 4th 2011, and let them go belly up!!! That will force them to do business in an honest manner!!!!! Go America!!!!

[pragmatist1]

People in debt get what they deserve. No one forced them to get into debt and more than likely live beyond their means. The same ones that fall for living like this, are the same ones who mindlessly engage a debt consolidation company and are also the same ones who go and get payday loans or early IRS refunds from tax preparers. They don't think and then when they finally realize the situation, they whine and complain that everyone else is to blame for their predicament, except themselves. They're is plenty of information available for the taking, yet too many fail to expend the effort to be proactive with their own finances. Predators prey on the ignorant and unsuspecting, which is why people need to be prepared and protect themselves, be responsible and accountable. It's not the government's responsibility to do this.

[jordanbessler]

I think it is ridiculous that CBS would do a piece on debt settlement without first tackling the credit card industry and their fleecing of the American public for decades. Where is the documentary on the Attorney General Lisa Madigan herself and the tens of thousands of suspicious campaign contributions she accepted, or the fact that her father (himself a key state political figure) helped buy her appointment?
The fact is consumer credit counseling services always take the side of the banks and credit card companies, many of them get funding through them. I called my bank and they wouldn't do a thing. Did this reporter make an attempt to call her credit card company and attempt to make arrangements or was she reading from her script. Many in the mainstream media have lost touch with the average American, people like me who work additional shifts to make ends meet. They sit behind their salaries and do not face the issues many of us do. Instead of reading from a script, call your credit card, tell them you can not make the minimum payment because they recently raised your rate from 17.9% to 29.9% out of greed and see what response you get.
Instead of taking the side of big business and allegedly corrupt politicians CBS should take the side of the common person. There are scams everywhere but if you recent the facts you find out there are legitimate companies out there. I did my research and I am currently deciding between Credit Solutions and Freedom Debt Relief. Both companies have had success in helping real people like me with real problems, people who have been taken advantage of by Bank of America, Chase and Capital One. If I knew when they offered me this card that it would take me 22 years or more to repay the amount I charged I would never ave gotten them. Thankfully these sharks now have to show you the pitfalls of compounding interest on your monthly statements. CBS you should show America how to thoroughly review their monthly statements and avoid getting into debt instead of coming down on the companies trying to help.

[tsigili]

The rip-off outfits are everywhere, even in the debt resolution realm.

Everyone out there, just wants to part the consumer from their money, and provide as little as possible, in return.