Credit-card delinquencies are at record highs, according to Fitch Ratings, and the U.S. unemployment rate of 8.9 percent is the highest since 1983. As more consumers fall behind on bills, settlement companies often end up adding to the debt burden rather than offering a cost-saving solution, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Maryland.
New York Attorney General Andrew Cuomo has begun a national investigation of settlement companies, and has sued two for fraud and false advertising. Illinois Attorney General Lisa Madigan has also filed two lawsuits against debt-settlement companies, alleging they “engage in deceptive marketing practices” and “do little or nothing to improve consumers’ financial standings.” Texas Attorney General Greg Abbott sued a debt settlement company in March, saying it engaged in “deceptive and misleading acts,” according to court documents.
It is much better to avoid this problem by taking wise personal finance actions – don’t take on personal debt for minor purchases (for a mortgage then debt is fine, probably fine for a car – though avoid debt if you can). The “secret” is not very secret. Just don’t buy what you can’t pay for. It is very simple, many people just don’t want to follow that simple strategy. Also save money in an emergency fund, so when some emergency comes along you don’t go into debt. You just use your emergency fund.
Once you are stuck in a bad situation with more debt than you can afford to pay back you have bad choices. Obviously many try to take advantage of you. Frankly they realize many that are stuck in bad financial position make bad financial decisions. Therefor it is a good place for those trying to rip people off to find people to take advantage of. The best way to deal with this is not to try and find the best debt negotiators it is to manage you finances well and not get in trouble.
Related: Personal Saving and Personal Debt in the USA – How to Use a Credit Card Successfully – Credit Card Companies Willing to Deal Over Debt – Where to Keep Your Emergency Funds? – Americans are Drowning in Debt