The NY Times has a fascinating article about the challenges facing the individual debtor in the confusing, oversold, and under-delivered marketplace of the debt relief peddlers. Indeed, the lucrative debt settlement industry is booming in lean economic times capitalizing on desperation. My offices in Lancaster and Woodland Hills are filled with individuals promised relief and after significant fees, are still confronted with a burden of debt.
Enjoying the trappings of abundant debt and desperation, the United States Organizations for Bankruptcy Alternatives convened a meeting at the posh Four Seasons Resort on the oceanfront in Palm Beach. On the other hand, the tale of woe of Linda Robertson featured in the article stands in stark contrast. Ms. Robertson was milked for $2,730 in fees, sued by her credit card company, and forced into bankruptcy. It is mind-boggling to contemplate 425,000 people enrolling over $11.7 billion dollars in such an industry.
As an Antelope and San Fernando Valley bankruptcy attorney, I am compensated for my legal services on behalf of those in debt. My intent is not to try to sell people on bankruptcy since bankruptcy may or may not be the right decision for you. My goal is simply to offer sound legal advice empowering the financial distressed and enabling the debtor to realize genuine relief. The bankruptcy process yields predictable results and definitively addresses the problem of crippling debt. My offices are busy in these difficult times, but it is the result of offering a truly valuable service and delivering a legitimate protection under the law and bankruptcy code.
Arguably, the 2005 changes to the bankruptcy rules prodded the debt settlement business into existence by making it harder for Americans to discharge their credit card debts through bankruptcy. I stand firm in my belief that our country is not better off for these changes. Ohhhhh, the irony that the Federal Trade Commission is leisurely preparing to tighten regulations on the debt settlement industry the federal government essentially pushed into existence sometime ago. The law of unintended consequences strikes again.
Let’s take some bullet point findings from the Times article about the debt settlement industry some argue has been unfairly tarnished by a few rogue operators:
- Consumer watchdogs and state authorities argue these companies generally fail to deliver.
- The attorney general of New York State and a similar investigation in Colorado agreed in a finding that no more than 1 percent of customers gained the services promised by marketers.
- Even the Association of Settlement Companies itself found only 34 percent of customers completed their programs. If this were only a measure of ineffectiveness ,which seems unlikely, the value of such an industry is a dubious proposition at best.
- Scott Johnson, chief executive of US Debt Resolve critiquing his own industry describes a “ponzi scheme” feeding an insatiable marketing effort.
- The Government Accountability Office conducted a special investigation and forensic audit testifying before the Senate Commerce Committee in April stated, “The vast majority of companies provided fraudulent and deceptive information.”
- Norma Googel, assistant attorney general in West Virginia states, “The industry’s not legitimate.”
While the debt settlement marketeers make good on their promise to “constantly pitch” that their the good guys in a bad industry, be cautious. Don’t allow yourself to be sold. Instead, seek advice, understand your financial and legal options, and make an informed decision. Genuine relief does exist.
[Via NY Times]