An article on the CNNMoney site has information about debt-settlement companies that I think is important for consumers to know. The warning Jen Haley discusses is the need to be aware of some debt-settlement companies. It is a warning that not only the Better Business Bureau has issued, but also the Government Accountability Office. Apparently the Government Accountability Office performed an undercover investigation of the debt-settlement industry. And, in some instances, what they found was disturbing. There are some fraudulent firms that state that they can negotiate a settlement with your creditors for less than what you owe. But first you must pay them a fee of as much as 20% of your total debt up front. Then the company sets up an account in which you deposit money. This money will be used for the settlements they negotiate. Unfortunately, it usually takes at least six months to a year before you have deposited enough money to start settling accounts. And here’s the catch, during this period of time you will not be making payments to creditors. You are in danger of piling up more interest and penalty charges. Your creditors could call you into court. Your wages could be garnished and your credit score could drop drastically.

Some of the warning signs to be aware of are:

• high fees requested in advance,
• any claims that your debt can be cut in half, and
• statements to the effect that debt settlement is a fast, easy and painless process. It’s anything but easy.

Of course, not all debt-settlement companies are frauds. But if you intend to try working with a debt-settlement company, check them out with the Better Business Bureau first.

Jen Haley wisely points out that “A better move is to try calling your creditors directly. That’s free and something you can do on your own.”

If you have any questions and live in Colorado please feel free to contact me. Kevin D. Heupel, Colorado Bankruptcy lawyer, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.