Better Business Bureau Gives Debt Settlement Companies An "F"

September 29th, 2009 by Reed Allmand

According to an article in the Star-Telegram, the Better Business Bureau is warning consumers away from using debt settlement companies, which often worsen their financial condition and fail to deliver on their promises.

The article said:

“The Better Business Bureau at Fort Worth has just completed a report on debt settlement businesses and warns consumers that seeking their help is rarely a good idea. Debt settlement usually adds to the consumer’s debt load and rarely leads to a significant reduction in debt, the BBB says…”Most every one of these companies have a very low or failing grade” with the BBB, spokeswoman Julie Lyssy said. “It’s a strange concept.”

According to the Better Business Bureau report, many debt settlement companies receive a failing grade because they often fail to deliver on their promises, fail to contact creditors, fail to successfully negotiate debt settlements and charge exorbitant fees that often leave the debtor paying more money out than would have originally been the case if they didn’t use the debt settlement company.  Also, many creditors, such as Bank of America refuse to negotiate with debt settlement companies. That means if your debt is held by Bank of America, a debt settlement company cannot help you. Debtors should keep in mind that no creditor can refuse to cooperate with a debtor or his/her attorney once the debtor files bankruptcy.  Bankruptcy is the only and most powerful tool for bringing stubborn creditors to the negotiating table.

If you have had a problem with a debt settlement company, please contact the attorney general’s toll-free complaint line at 800-621-0508 or visit www.oag.state.tx.us. If your financial situation has worsened because of a debt settlement company, you may want to consider filing bankruptcy.