Debt settlement companies shut down by authorities
The lawyer general for Florida and the Federal Trade Commission obtained a court order compelling 11 debt settlement companies owned by three people to stop marketing their services. Authorities say that the companies would tell people that they would resolve their credit card debt in exchange for a monthly payment. However, authorities said that those who paid the debt settlement companies were victims of a scam.
Instead of working to resolve their credit card debt, the victims found that their accounts went into default and their credit scores were ruined. In most cases, victims sent payments of thousands of dollars each month. According to the complaint against the companies, they would call customers using other debt settlement companies to claim that they were taking over the accounts. Furthermore, they presented themselves as non-profit entities when that was not the case.
According to those who study debt settlement methods, the best option may be to talk with a credit counselor from a non-profit entity. It may also not be the best idea to stop making credit card payments regardless of what a debt settlement agency may say. This is because debt collectors may try to pursue unpaid debts, and that may result in a consumer facing a lawsuit.
Those who have unsecured debt such as an outstanding credit card balance may benefit from filing for bankruptcy. Bankruptcy may allow an individual to reorganize debts or have them discharged immediately. While a case is ongoing, creditors are generally prohibited from taking collection actions such as calling or sending letters to a debtor. Creditors may also be unable to pursue a foreclosure or repossession while a case is ongoing. An lawyer can explain the eligibility requirements.