For those toiling in debt, the promise of being debt free after working with a debt management company can be very persuasive. After all, who wants to deal with unrelenting creditors on their own. Creditors don’t care about the everyday struggles you go through in making ends meet, or how you essentially have to rob Peter to pay Paul every month.
Unfortunately, unscrupulous debt management companies do.
They play on these fears to rope unsuspecting debtors into systems where these companies propose to work with creditors to lower debt payments or to eliminate debt, only to leave their customers deeper in debt. A recent report on consumerist.com highlighted one of the companies recently charged by the Federal Trade Commission (FTC) for committing fraud.
For instance, the company would advise clients to stop paying their bills and stop communicating with creditors, ostensibly in an attempt to gain some sort of leverage with them. These are two things that do not help consumers who are struggling with debt. Also, large portions of the monthly fees consumers paid to the company did not go towards paying debts. Instead, it went only to the company’s bottom line. These actions commonly leave consumers in worse financial shape than they were before dealing with such a company.
While the FTC has lodged charges against the company, there are many others just like it that have not been caught.
Aside from the unpractical nature of paying debts that cannot be reasonably be paid, these companies downplay the importance and help that bankruptcy can provide. Don’t fall for it.
Source: HuffingtonPost.com “Why being part of a blended family is the best of both worlds,” Brittany Wong, June 20, 2014