Healthy Consumer Skepticism Fades When Facing Debt Problems

You saw the ad on television. Even more ads are seen online. Surely no one would make such claims if they couldn’t back it up. Otherwise, the government would clamp down, right?

Well, they do, sort of. Given the hundreds of debt settlement companies that routinely break numerous laws everyday, it is a wonder they are able to operate.

Then you have to understand the timeline of many debt settlement companies. A large number are fly-by-night, boiler room operations.

Most of the owners know that these cash cows are short-lived. They make unreasonable claims. They attract desperate debtors with false promises of huge reductions in debt and legal protection.

By the time a debt settlement client figures it out, they are out thousands of dollars and still have not settled their first account. Many find out the hard way, when they are sued by a lender and have no legal representation.

The sad fact is that the Federal Trade Commission has been woefully lacking in its investigations of debt settlement schemes. Individual states attorneys general have been more successful in pursuing these rogues, with West Virginia and New York leading the way. Even then, investigations can take from six months to well over a year. Meanwhile, those firms under investigation continue to collect millions of dollars in deposits from which their fees are deducted right off the top.

Many of the clients I speak with acknowledge that they should have been more diligent in investigating the reputation of such companies. They tell me, “I knew it sounded too good, but I wanted it to be true.”

Others cite how trustworthy and honest the sales rep appeared. My response is “con men are some of the most trusting personalities you will ever meet.” For true trust, investigate their rating with the Better Business Bureau. It is no guarantee of good service, but a negative rating magnifies problems that can plague a bad company.

While many of the smaller debt settlement companies come and go, there are others that seem to be able to create enough good press to drown out the lawsuits and complaints. I have even seen so called “studies” that appear to tout the benefits of debt settlement. These are nothing more than smoke and mirrors, trying to legitimize what is essentially a rogue industry.

My point is, don’t take me just at my word for it. For any major purchase, I refuse to do business with any company that carries an unsavory rating with the Better Business Bureau. If you think you want to contract with a debt settlement company, contact the office of New York Attorney General Eric Schneiderman and ask what they think.

Debt settlement companies try to explain why they have poor ratings, usually claiming that their entire industry is being targeted. That should tell you something about that industry.

When it comes to claims of any company that offers to help, see if they are helping you or helping themselves. Don’t take their word for it either. Do your research and protect yourself.

Kenneth Long
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Kenneth Long

President at Debtors Unite
Kenneth Long is President of Debtors Unite, Inc. as well as President and Vice Chairman for Vision Credit Education, Inc. He served as a regional coordinator for the North Carolina Saves campaign. Long co-founded the Wake EITC Coalition along with Family Resource Center of Raleigh.

Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.

Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.

In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.

Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!

Favorite quote:

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."

Thomas Jefferson
Kenneth Long
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