Many of my clients have already tried various debt relief programs before realizing they need to file for bankruptcy. While there may be a few programs that work on a nonprofit basis, most of these programs are destined to fail, as they are heavily front end loaded with fees, it costs substantially more than bankruptcy, it doesn’t help your credit any better than bankruptcy, in fact, it only draws out the pain, and if and when it doesn’t fail, you may need to file for bankruptcy anyway. And worse yet, they are typically out of state companies that are not regulated by various agencies.
I have had many clients that have been strung along in these programs, while creditors start dropping out one by one, suing my clients, getting judgments and garnishing wages. The debt settlement place just keeps collecting the money until people finally realize that they have essentially been scammed. Well I don’t like telling people this, they have usually figured it out by the time they come to me, and sometimes we can even negotiate a full or partial settlement from what they had paid.
That said, they are great marketers. But some of these firms end up imploding, as noted in this recent article.